Death of a Member: Lord Archer of Sandwell
	 — 
	Announcement

Baroness D'Souza: My Lords, I regret to inform the House of the death of the noble and learned Lord, Lord Archer of Sandwell, earlier today. On behalf of the House, I extend our most sincere condolences to the noble and learned Lord's family and friends.

Animal Welfare
	 — 
	Question

Lord Dear: To ask Her Majesty's Government what initiatives they intend to pursue to protect the welfare of animals, with special regard to the long-distance transport of horses.

Lord Dear: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare an interest as a trustee of World Horse Welfare, a registered charity previously known as the International League for the Protection of Horses.

Lord De Mauley: My Lords, the Government will continue to ensure that the requirements of the EU rules regarding welfare during transport are applied robustly to all long-distance transporters of horses operating within the UK. We will continue to press the European Commission to introduce the recommendation made by the European Food Safety Authority that horses travelling for slaughter should not face journey times exceeding 12 hours.

Lord Dear: My Lords, the Minister will be aware of the suffering that is caused to around 65,000 horses each year as they are transported across Europe for slaughter, often over very long distances and in totally unsatisfactory conditions, with many of them ending up on the plates of southern European restaurants. Further, he may be aware that EC Regulation 1/2005 allows for proposals to be made to regulate those journeys if scientific evidence supports that change. In the light of that, can the Minister confirm that since evidence supporting that change was indeed presented to the Commission by the European Food Safety Authority last year, the Government have now pressed the Commission for a proposal to limit the maximum journey time for horses destined for slaughter?

Lord De Mauley: Yes, my Lords. I thank the noble Lord for the work he does in this area. I, too, need to declare an interest as president of the charity SPANA, which is concerned with working animals, particularly equids, in developing countries. We welcome the European Commission's report of 10 November 2011 on its review of Regulation 1/2005, and agree that the first priority should be better enforcement of the existing legislation across Europe. However, we share the disappointment of many that the recent recommendation by EFSA that horses going to slaughter should not face journeys exceeding 12 hours has not been adopted by the Commission. While it would be illegal for us to act unilaterally in an area that is already covered by directly applicable EU legislation, we will continue to push for this recommendation to be adopted by the European Commission at the earliest opportunity.

Baroness Trumpington: My Lords, as a former president of the organisation that the noble Lord, Lord Dear, spoke of, and having taken a Bill through this House on this very subject and pursued this very distasteful European practice, if I may say so, may I ask the Minister whether he is aware of the trade from South America to Italy, with horrible conditions in the ships for the horses, which are then turned into sausages or whatever the Italians care to eat?

Lord De Mauley: My Lords, I am grateful for the work that my noble friend has done in this area. I think that noble Lords around the House share her horror, as do I, at the conditions in which these unfortunate animals travel. As I say, we are pressing the Commission to adopt the EFSA rules. I am not aware specifically of the position on the transport of animals between South America and Italy, and I will look into it.

Lord Knight of Weymouth: My Lords, the Government's record on animal welfare is now in tatters, given that they are not listening to science on badgers, are dragging their heels on animals in circuses and have made a shambolic U-turn on shooting buzzards. [Laughter.] We can see how seriously the party opposite takes animal welfare from its reaction to that. Given that more than a million people have signed the petition on the long-distance transport of horses for slaughter organised by Animal Angels and that MEPs now agree that the limit should be eight hours, is it the Government's policy that the limit should be eight hours or the 12 hours that the Minister talked about?

Lord De Mauley: My Lords, most animal welfare NGOs want an automatic eight-hour limit on all journeys for all livestock going to slaughter. The EFSA report did not recommend such an approach, recognising that different species can be transported over different periods of time without unnecessary suffering. Scientific research supports the argument that the quality of transport and the competence of the driver tend to be the major factors in the welfare of animals during transport and not necessarily the length of the journey time.

Lord Addington: My Lords, does my noble friend agree that, although government can do quite a lot, our own experience has shown that public opinion can change things quickly? Is the Minister encouraging our Government to talk to the rest of Europe about raising public awareness in those countries?

Lord De Mauley: That is a very important point, and it will form part of what we are doing at the European Commission.

Lord Donoughue: While it is commendable to press the European authorities for more action, will the UK Government not do more themselves especially to protect the UK horse population from threats to its health? In particular, will he commit the Government to increasing the levels of surveillance of this problem in British ports?

Lord De Mauley: My Lords, I have a lot of sympathy with the noble Lord's words. We would prefer to see the export of meat or germ plasm rather than of livestock, and that animals are slaughtered as close as is practical to their point of production. However, the export of livestock for slaughter within the EU is perfectly legal. To ban it would be illegal under existing EU competition legislation. That legal position has been confirmed by rulings by the European Court of Justice and by High Court cases. The Government are committed to improving the welfare of animals. If animals are exported live, their transportation should comply fully with the necessary legal requirements as laid down in EU and national law.

Baroness Fookes: My Lords, the treatment of animals in transport-not only horses but all kinds of farm animal-is a long-standing disgrace, and I am sick and tired of all the excuses. If it is important that we have good transport and good drivers as the Minister has said, what action will he take to ensure that that is seen to? I should probably declare an interest in that I am involved with a good many animal charities.

Lord De Mauley: My Lords, enforcement provisions and procedures by which the various regulations are applied are in the Welfare of Animals (Transport) (England) Order 2006 and similar legislation in Scotland, Wales and Northern Ireland. AHVLA and local authorities are responsible for regulatory and enforcement action under this legislation.

Schools: Admissions
	 — 
	Question

Lord Lucas: To ask Her Majesty's Government whether they will allow independent schools, particularly those which were formerly direct-grant grammar schools, to join the state sector on the basis of needs-blind admission.

Lord Hill of Oareford: My Lords, the Government already allow high performing independent schools to join the state sector by submitting successful applications to become free schools. Free schools are independent state-funded schools that do not charge fees, must abide by the schools admissions code and are not able to have selective admissions criteria. It would therefore be open to the kind of schools to which my noble friend refers to apply to join the state sector.

Lord Lucas: My Lords, I am sad that my noble friend does not share my disappointment that, after so many decades of pontificating and after my right honourable friend Michael Gove's speech on the need to rebalance the independent and state sectors, no party seems prepared to engage with an initiative from a trusted intermediaries such as the Sutton Trust to take advantage of all the work done under the previous Government to improve the state system and relationships between the state and the independent sector and make a radical change to the balance between state and independent education. Can he offer no hope to the Sutton Trust in its ambition to make a change which will otherwise take 50 years on the best possible course?

Lord Hill of Oareford: My Lords, I am extremely keen, as are the Government, to encourage as much co-operation as possible between the independent sector and the maintained sector. The noble Lord will know better than me the number of examples of independent schools working with the maintained sector in a variety of different ways-whether through involvement in the academies programme, coming into the maintained sector or providing courses for children at local maintained schools, all of which I thoroughly applaud. However, the main priority of the Government is to do what we can to raise the standards for the vast majority of children in maintained schools. That is the focus of the work we are doing.

Lord Lea of Crondall: My Lords, does the Minister agree with the speech referred to by the noble Lord, Lord Lucas? Are the Government backing the speech by Mr Michael Gove pointing out that apartheid in the British education system is causing great damage to our society and that the Government must do something about it?

Lord Hill of Oareford: I am sorry, my Lords, I thought I had said that in overcoming that divide the Government are extremely keen, as is the Secretary of State, to pursue the goal of bringing the two sectors together in as many ways as we can. As I said, some of that is through sponsorship of academies. The free schools programme, to which I just referred, will welcome high quality independent schools into the maintained sector, providing a good quality of education free for children from all backgrounds. It follows from some of the initiatives that the previous Government took to bring some of those schools into the academy sector.

Baroness Walmsley: Will my noble friend reaffirm the Government's clear statement that they do not want an expansion of selection among schools maintained by the state? In that connection, will he consider clarifying the law on expansion of existing grammar schools and, if necessary, change it if it is not meeting that objective?

Lord Hill of Oareford: Yes, my Lords, the Government's position on selection is clear and we have no plans to change it. The existing legislation that governs the prohibition on the introduction of new selective schools remains in place. The only change that the Government have made since we came in is the ability of schools of all types to expand their number locally in response to parental demand, if they are popular schools, because we are keen to give parents more ability to get their children into local popular schools.

Lord Adonis: My Lords, will the Minister congratulate the growing number of independent schools which have joined the state system in recent years as academies by giving up both fees and selection? In particular, will he commend Belvedere School in Liverpool, William Hulme's Grammer School in Manchester, Bristol Cathedral Choir School and Colston's Girls' School in Bristol, which are doing a fantastic job as state academies and are open to their population as never before by becoming academies, giving up fees and giving up the 11-plus?

Lord Hill of Oareford: I know that this subject is very dear to the heart of the noble Lord, Lord Adonis, and I am extremely aware of all the work that he has done for many years to pursue that goal. Those schools are making a fantastic contribution. I was looking at their results the other day. Since they have come into the maintained sector, without selective admissions, they continue to perform an extremely good job. A number of schools across the country demonstrate that it is possible to achieve outstanding results if they have high aspiration, high ambition, an orderly environment and work hard for all of their children to do well.

Lord Lexden: My Lords, does my noble friend recall that some years ago, when I was its general secretary, the Independent Schools Council put forward for discussion an ambitious set of proposals to provide open access to schools of all types in the independent sector? Under these proposals, government expenditure per pupil would be no higher than in mainstream, maintained schools. Pupils of a wide range of ability and aptitude would benefit, with families on low incomes being offered free places. Will the Government now give consideration to some such arrangement?

Lord Hill of Oareford: My Lords, I said in my reply to my noble friend Lord Lucas that the focus of what the Government are doing is to attempt to raise the standards in the bulk of the maintained sector, so that more schools are able to achieve for their pupils the results that the most outstanding schools in the maintained sector are already delivering. That is our focus and some of these other ideas, interesting though they are, are not where our priorities lie.

Libraries
	 — 
	Question

The Earl of Clancarty: To ask Her Majesty's Government what action they will take to protect public libraries from closure.

Baroness Rawlings: My Lords, DCMS Ministers have taken a number of actions to oversee and promote the public library services provided by the local authorities, including writing to authorities to set out ideas that they might consider before closing front-line public library services. Arts Council England, too, has launched the libraries development initiative, which is funding projects to explore innovative ways of working to help shape a resilient vision for future public library services.

The Earl of Clancarty: My Lords, the Minister may be aware that the Public Libraries News website has recorded 121 libraries as having closed within the past 18 months, while over 600 more are currently threatened with closure. This Government have chosen to close libraries while they promote literacy, cross the digital divide and allow children to explore their natural love of reading. Is that a choice that they can defend?

Baroness Rawlings: My Lords, I know that the noble Earl, Lord Clancarty, has a great interest in this and we all have sympathy for many of his views, but we are aware that some libraries have found difficulties in the present climate. To help libraries to become more efficient and successful in every way, the Government have transferred the MLA's responsibility for libraries development to the Arts Council, which is working with local government associations on its new libraries development initiative. For the many noble Lords who are interested, a long list of projects that the Government have supported and which are receiving funding is available on the Arts Council website.

Baroness Bakewell: My Lords, are the Government aware that there are 250 literary festivals in this country and that the numbers are increasing? There is an appetite among people and children for more books than they can afford. How is the declared ambition for improved literacy among children to be achieved if libraries are closing?

Baroness Rawlings: My Lords, I am fully aware of the interest of the noble Baroness, Lady Bakewell, in libraries and children because we have discussed this several times, and I know that the literary festivals are mushrooming all over the country. Children's literacy, as we have said before, is vital. We know how important it is for libraries not to close-we have a wonderful Library here-but robust data on the libraries sector are published annually by the Chartered Institute of Public Finance and Accountancy. It is a local government decision if libraries are closed.

Lord Jones of Birmingham: Can the Minister please comment on the fact that, due to the successive policies of Governments of all parties over many years, one in five adults in this country now cannot read to the standard expected of an 11 year-old? Governments of all parties have then expected business to go out and compete in a globalised economy with a workforce that is not fit for purpose. Will she please comment on the fact that libraries make a considerable contribution to enhancing literacy in the adult population at a time when we in business need all the help we can get?

Baroness Rawlings: The noble Lord, Lord Jones, makes a valid point. We are fully aware of the importance of literacy in schools. My noble friend has just confirmed that we are giving high priority to children's literacy. We are all aware of the importance of libraries not just for books but as a social and peaceful space for people. People understand that this is not just about the facilities. Libraries also provide a lot of electronic information, but it all goes together. As I said, we are fully aware of the importance of libraries.

Baroness Gardner of Parkes: In view of the concerns expressed, particularly by the noble Earl, Lord Clancarty, who pointed out how many libraries are at risk, will the Minister tell me in what circumstances the Government will intervene to stop a library closing?

Baroness Rawlings: The Secretary of State has a primary duty under the 1964 Act, but he must also make certain that local authorities uphold their statutory duty to provide a comprehensive and efficient library service. If the Secretary of State thinks that a local authority has failed in that duty, he may call a local inquiry to investigate, but it will not be for solely financial reasons.

Lord Borrie: My Lords, in an earlier answer, the noble Baroness indicated that this is essentially a local government matter. However, does she not agree that under the Public Libraries and Museums Act, central government must ensure that local government does its job of providing an effective public library service properly?

Baroness Rawlings: The noble Lord, Lord Borrie, makes a very valid point. The terms "comprehensive and efficient" are not defined in the 1964 Act. However, broadly speaking, the Act requires local authorities to provide free of charge access for people who live, work or study in the area to borrow or refer to books, printed materials and pictures in line with their needs and requirements.

Baroness Butler-Sloss: My Lords-

Lord Stoneham of Droxford: My Lords-

Noble Lords: Lib Dems!

Lord Stoneham of Droxford: In view of the importance of libraries, have the Government any plans to update and review the 1964 Act?

Baroness Rawlings: The Government are building on the future libraries programme and the libraries development initiative, which is run by Arts Council England and is designed to test new approaches to the library service. In February 2012, Arts Council England and the Local Government Association awarded £230,000 to fund 13 library projects across England. At the moment, these difficulties are being looked into further.

Baroness McIntosh of Hudnall: May I tell the Minister-

Noble Lords: Oh!

Baroness McIntosh of Hudnall: I will come to my question but I wish to make the point that at 8 o'clock this morning I was reading How to Catch a Star with my two year-old grandson. Does the Minister agree that for children who do not have the good fortune to have a number of books in their house, libraries are very important and that the issue is not just that there are enough of them when you take the country as a whole but that there are enough of them locally for the people who are least able to access transport and who are most likely not to go if the difficulty of getting to the library increases?

Baroness Rawlings: Yes, libraries are vital for children, as is their school, which also has books. Transport to get to libraries or to any other public places where children learn is, of course, of paramount importance.

Environment: Rio+20 Conference
	 — 
	Question

Baroness Kinnock of Holyhead: To ask Her Majesty's Government whether they intend to promote the inclusion in the outcome document of the Rio+20 conference of a commitment to the right to safe and clean drinking water and sanitation as a human right.

Lord De Mauley: My Lords, the UK has long recognised the right to water as an element of the right of everyone to an adequate standard of living and is now in a position to support the inclusion of commitments to the right both to safe and clean drinking water and to sanitation as a human right in the Rio+20 outcome document.

Baroness Kinnock of Holyhead: I thank the Minister for his response to my Question. The focus from the Government is very much on water and there is little concentration on the importance of sanitation, but it is indispensible to public health and vital for human development. Does the Minister recognise that the lack of sanitation is a major cause of diarrhoeal disease, which is the second biggest killer of the world's children? Against this background, will he tell me when the Government will conclude their exceedingly long review, join the majority of OECD countries, really acknowledge that sanitation is a human right and, at last, ratify the UN right to sanitation?

Lord De Mauley: My Lords, I thought that that was what I had just said. The right to sanitation is not specifically provided for under any of the international human rights treaties. The UK has therefore waited until it was satisfied that there was sufficient basis in international law to recognise the right without undermining the international human rights framework. While placing a high priority on improving sanitation in development terms, the UK has, I think understandably, been cautious about recognising new rights under international law-as, presumably, were the previous Government, who, while recognising the right to water in 2006, did not recognise the right to sanitation.

Lord Roberts of Llandudno: My Lords, I am grateful to the Minister for his reply to the noble Baroness. Of course, we realise that every fifteen seconds a child will die of cholera. Emergencies arise and we need to respond to needs in various places. What do the Government have by way of a supply of water purification units and tablets in order to meet any emergency demands?

Lord De Mauley: I cannot give my noble friend a specific answer now, but I will write to him. On a more general basis, on 20 April, at the Sanitation and Water for All high-level meeting, the Secretary of State for International Development committed to doubling the UK's ambitions on water, sanitation and hygiene to reach at least 60 million people by 2015.

The Lord Bishop of Bath and Wells: My Lords, I declare an interest as an ambassador for WaterAid and acknowledge that the Rio+20 conference in June followed the Johannesburg summit at which world leaders agreed that the current millennium development goals on sanitation remain substantially off-track in terms of global development targets. Can the Minister kindly give some further information on what the United Kingdom is doing to help to reverse this neglect, which kills more than 700,000 people a year, 90% of them children under five?

Lord De Mauley: There are a number of questions within the right reverend Prelate's question. He referred to the millennium development goals. We are committed to those goals. There is also the question, of course, of the link between them and the sustainable development goals. It is important to look to the framework post-2015, to which we are paying a great deal of attention.

Baroness Hayman: My Lords, access to sanitation and clean water is obviously a crucial health issue. Does the Minister agree that it is also an important issue in regard to that great driver of development, girls' education? Girls who have to spend their time going long distances to collect water, or girls who do not go to school because there is no adequate sanitation there, are disempowered and debarred from access to that crucial education.

Lord De Mauley: My Lords, that is a very important point. One of the key principles of the Government's response to the global crisis of water and sanitation is to increase our focus on women and girls. Women are more likely to fetch water and are at risk without proper sanitation facilities. By improving access to water and sanitation, we will get more girls and women into school and keep them there.

Lord McColl of Dulwich: Does the Minister agree that one of the problems in Africa, where I work, is that when people dig a well they often stop the moment they reach water? The essential thing is to go on several feet deeper. The well will then survive. It is very important to train people to keep the well in good working order.

Lord De Mauley: I quite agree with my noble friend. Training is at least as important as the dropping of the well in the first place.

Lord Geddes: Does my noble friend agree that water is already, and will increasingly become, the most valuable commodity that the world has and that its conservation is vital?

Lord De Mauley: Yes, that is becoming increasingly apparent.

The Earl of Listowel: My Lords, the Government made a commitment in the Queen's Speech to giving 0.7% of gross national income to the developing world. Have they planned to legislate for an ongoing commitment to give 0.7% of gross national income to the developing world?

Lord De Mauley: I will write to the noble Earl.

Business of the House
	 — 
	Timing of Debates

Moved By Lord Strathclyde
	That the debates on the Motions in the names of Lord Adonis and Baroness Jones of Whitchurch set down for today shall each be limited to 21/2 hours.
	Motion agreed.

Examiner of Petitions for Private Bills
	 — 
	Motion to Approve

Moved By The Chairman of Committees
	That, pursuant to Private Business Standing Order 69, Mrs K S Lawrence be appointed an Examiner of Petitions for Private Bills in place of Mr T V Mohan.
	Motion agreed.

Joint Committee on Human Rights
	 — 
	Membership Motion

Moved By The Chairman of Committees
	That Baroness O'Loan be appointed a member of the Joint Committee in place of Baroness Campbell of Surbiton, resigned.
	Motion agreed, and a message was sent to the Commons.

Youth Unemployment
	 — 
	Motion to Take Note

Moved By Lord Adonis
	That this House takes note of the level of youth unemployment and its social consequences.

Lord Adonis: My Lords, in opening this debate on youth unemployment, I cannot help observing that we have two and a half hours to debate one of the most critical issues facing the country, which is one-10th of the 25 hours that the House has spent debating House of Lords reform in the past two months alone. Perhaps our priorities are not in quite the right order, or in the right proportion.
	I doubt that many Members of the House deny the urgency of getting young people into jobs. A lost generation is in the making, which could scar Britain for decades to come. On this, I agree with the Deputy Prime Minister, who described youth unemployment as,
	"a ticking time-bomb for the economy and our society".
	I also agree with what he said needed to be done, which is to get every unemployed young person earning or learning again before long-term damage occurs. The question for this debate is how far actions match words.
	However you look at it, the situation is dire. There are 954,000 people under the age of 24 who are not in employment, education or training. Most concerning of all, 167,000 of those aged under 24 have been unemployed claimants for more than six months, a number that has more than doubled since last April, while 61,000 have been claiming for more than 12 months-a number that has more than trebled in the past year. Young people have fared far worse than older people in the severe downturn. We can debate why this is the case but for the young people affected this is not an academic debate, it is a personal catastrophe-an immediate source not only of low income but of low self-confidence, poor health, damaged relationships and often extreme social marginalisation, all of which only further harms their job prospects and adds to the cost of putting it all right. I doubt that your Lordships will dispute any of this. The question is what we do about it.
	Of the analysis that I have read in recent months, I have been most impressed by the report of the Commission on Youth Unemployment, sponsored by ACEVO-the Association of Chief Executives of Voluntary Organisations. It highlights three priorities. First, young people need more job opportunities to be available here and now. Secondly, young people need better preparation and motivation for work. There needs to be a new vision for what ACEVO calls,
	"the 'forgotten half' of young people who are not destined for university or a high-quality apprenticeship post-16".
	Thirdly, unemployed young people need the support of a far more active welfare state to help them to get into work and to stay there.
	Let me take these three priorities in turn. First, on more jobs, almost everyone accepts that stronger incentives are needed for employers to recruit more unemployed young people. The present Government, after first scrapping the previous Government's future jobs fund, have now recognised the need to do more; hence, the new youth contract offering 160,000 wage subsidies of just over £2,000 each for new private and voluntary sector jobs given to long-term unemployed people over this year and the next two years.
	The youth contract represents 53,000 work opportunities over the coming year, which, in the face of 167,000 young people who have been unemployed claimants for more than six months, is not that many, even if they are all created. However, 53,000 would be a start, so I would be grateful if the Minister would tell us precisely how many young people have so far this year been recruited by employers from the Work Programme and what is the Government's projection for the rest of 2012?
	Will the Minister also tell us what progress has been made in creating the 100,000 work experience places also promised for this year in the youth contract? I strongly support work experience placements, provided the young people are treated properly, but they are of short duration-as little as two or three weeks each-and are not, of course, a substitute for real jobs paying real wages.
	My party believes that we need to go further than the youth contract; hence our proposed real jobs guarantee for the under 25 year-olds who are long-term unemployed. For those who are out of work for more than a year, there would be six months paid employment with the state providing a wage subsidy for 25 hours of work and the employer covering the cost of 10 hours of training a week. I look forward to hearing from the Minister whether, if the youth contract does not rapidly reduce the number of the long-term young unemployed, the Government will consider adopting the real jobs guarantee and the bankers' bonus tax which makes it possible. I urge the Prime Minister and the Chancellor to do so sooner rather than later if their concern about the young unemployed is more than crocodile tears.
	The second priority is to prepare people better for work. Schools and further education colleges have a big job to do in this respect. Even with the rise in school standards over recent years, four in 10 16 year-olds are still not getting five good GCSEs including English and maths, which is all important in terms of their employability. Professor Alison Wolf's recent report on vocational education contains a startling fact. Of the four in 10 16 year-olds who do not get five good GCSEs including English and maths, only 4%-I repeat, 4%-attain GCSE level English and maths in any vocational education and training that they do afterwards. As Professor Wolf rightly says, English and maths should be the essential building blocks in whatever courses are taken by post-16 year-olds without basic skills. Urgent reform is needed here.
	Better still of course would be for teenagers to get English, maths and a good general education while they are still at school. School standards are still not nearly high enough, particularly in the many hundreds of comprehensive schools where a majority of teenagers are still not leaving with essential GCSEs. That is the reason why the previous Government concentrated the academy programme on the lowest performing schools-to give them a "big bazooka", in the words of the Prime Minister. I urge the Government to focus new academies and free schools in disadvantaged areas and to do more to support the recruitment of highly motivated teachers into such areas by, for example, expanding more rapidly than planned the excellent Teach First programme.
	The education system also needs to promote technical disciplines far better. That is why I strongly support the university technical colleges proposed by the noble Lord, Lord Baker. They are academies for 14 to 19 year-olds, each with a technical specialism-ranging from engineering and construction to the digital media-and each sponsored and managed jointly by companies and universities.
	Then there are apprenticeships. Everyone now talks the language of apprenticeships, which is a welcome change, and the Government cite very large numbers for new apprenticeship starts. However, if you scratch the surface you find that most new apprentices turn out to be in their late twenties and all too many of them existing employees renamed apprentices because of the Government's rebadging of the Train to Gain employee training scheme as an apprenticeship scheme. Large numbers also turn out to be on short-term training courses of less than six months' duration.
	There is a real danger that apprenticeships are being dumbed down as fast as they are being created. How many 16 to 21 year-olds were last year in apprenticeships lasting more than a year that had both an employment and college-based component, and how many employers offered such apprenticeships in that year? Is the Minister's own department giving a lead and offering apprenticeships? Does he by chance have an apprentice in his own office? When I was Minister, I did not-and, looking back, I should have done.
	This is not just tokenism. Unless central and local government give a strong lead, they cannot complain if the private sector does not follow. Public procurement has an important part to play here. For example, Kent County Council makes the creation of apprentices a procurement condition for contracts worth more than £1 million, with at least one apprenticeship required per £1 million spent on labour. The first such contract was recently awarded to a company delivering highways maintenance which, as a result, will take on apprentices to cover at least 3% of its jobs. The company, fittingly, is called Enterprise. We need to seek far more enterprising companies of that type across England.
	Unless good-quality apprenticeships for the under-21s, leading to good-quality jobs, become far more numerous, we will never have secure pathways to employment for teenagers who are not on track to go to university. As the ACEVO report says:
	"If the route to university is a well-signposted motorway, the route into work for these 16-to-18-year-olds is more like an unmarked field of landmines".
	In this respect, I am attracted by ACEVO's suggestion that we set up an equivalent of UCAS for apprenticeships, with employers, national and local, large and small, advertising their apprenticeships through a single web-based system. The aim would be for this to become as near as possible a universal listing service.
	We also need more and better work experience for teenagers while at school, and systematic mentoring of young people by young people themselves, including those in work mentoring those out of work or on their way into it.
	Thirdly, on the welfare system itself, the Minister is a respected champion of an active welfare system, one far more focused on helping people into work and mobilising organisations which are good at promoting this to do so instead of relying just on a state bureaucracy. Is he satisfied that the current system is remotely active enough in helping young people into work and training, particularly those who are clearly in danger of long-term unemployment, or only casual employment, because they have few qualifications and virtually no work experience? The Minister's flagship reform is the work programme, providing intensive and tailored support for the long-term unemployed. I shall read out the description I have been given of young people's eligibility to be included in the Work Programme. It says that,
	"some will be referred on a mandatory basis after 9 months of claiming JSA ... some will be referred on a mandatory basis after 3 months of claiming JSA (if they are 18 and were NEET for 6 months prior to starting to claim JSA, or if they claimed JSA for 22 of the past 24 months ... some can be referred at the discretion of Jobcentre Plus after 3 months of claiming if they fall into particular categories (e.g. if they are care-leavers, or homeless) ... some will be referred immediately after their Work Capability Assessment to determine whether or not they should be on ESA as opposed to JSA".
	So that is all clear then. More to the point, I doubt that it is at all clear to the young people who need this support, many of whom need it a good deal sooner than nine months after going on the dole, or after they have notched up 22 out of 24 months on the dole. I know that as part of the youth contract more support within Jobcentre Plus is being provided to the under-24s, but I would welcome the Minister's views as to how intensive support can be given to young people who are clearly in danger of prolonged unemployment before they have been unemployed for the best part of a year.
	These are all vital issues and I look forward to what other noble Lords have to say. I end on a personal note. When I was 18, in 1981, I went to sign on in my local unemployment benefit office, which was the former Camden Town workhouse. I had a few months to go before university and in those days students on holiday were allowed to sign on. However, as I was filling in my form, the manager spotted me, came over, and said to me, "Oi, you look as if you can read and write. How about a summer job working here?". Within 10 minutes I was on the other side of the counter. I was given precisely 10 minutes training and 20 minutes later I was taking fresh claims. I spent that summer and all my university holidays thereafter working as a counter clerk in the Camden Town unemployment benefit office. This was a life course in bureaucracy and all its glories, but, more to the point, it was a life course in unemployment and all its evils. This was 1981, when unemployment went over 3 million. We had them queuing round the block to sign on, often taking six or seven hours simply to get through the queue-young and old, many of them were in tears as they told their stories. Virtually nothing was being done to help them. I hoped then that that situation would never happen again, but it is happening again; it is happening now. We all have a duty to see that the resources of the state are mobilised to the full to bring it to an end as soon as possible.

Lord Bates: My Lords, it is a pleasure to follow the noble Lord. I congratulate him on securing this very important and timely debate. His moving story of how he secured his first employment reminded me of the vital importance of human intervention. We often deal in schemes, numbers and bureaucracy and forget that these are real people who can be excited and motivated.
	My interest in the unemployed is exercised in a practical sense through my role as a patron of Tomorrow's People in the north-east of England, which works with hard-to- reach young unemployed people and tries to inspire them to get into work. There is no doubt that it can make a profound difference to young people to interact with people who believe in them-perhaps they are the first people to do so-tell them that they can achieve things and that they are a solution rather than a problem. Work is going on as we speak in that body's Working It Out programme, which is taking hard-to-reach young unemployed people in the north-east of England, who often come from households who have been unemployed for generations, and is getting 75% of them into employment or training. Given that those people often have no qualifications, I find that inspiring, as is the transformational effect on their self-confidence of starting employment or training, which the noble Lord also spoke of.
	I also completely agree with the noble Lord's analysis of the vital importance of education in this area and applaud the work that he did when he was an education Minister to promote the academies programme. I know he will find it every bit as frustrating as do current Ministers that often areas where there is greatest need are the last to get the quality of education that they require. It is all well and good saying, "Wouldn't it be great if more free schools and academies went to the areas where they are most needed?", but, having tried to set up an academy and a free school in an area where they are most needed in the north-east of England, I found that they were fought tooth and nail every inch of the way by dog-in-the-manger local education authorities and trade unions, which blocked their paths. I find it deeply frustrating to see people wring their hands while talking about the young unemployed but then deny them the education which could provide them with a pathway into employment.
	I also very much respect the way that the debate was introduced because it recognised that youth unemployment has been a long-term trend, as was set out in the helpful briefing pack that we received for this debate from the House of Lords Library. Youth unemployment was not invented in May 2010; it has been rising steadily. As Demos says:
	"Before the financial crisis hit, youth unemployment had already been on the rise. In fact, UK youth unemployment has risen ... as a share of total unemployment for the past 20 years".
	It also observes that from January to March this year the rate was 1.7% lower than the previous year. That is an important point. Although 1.02 million young people being unemployed is a tragedy, we must remember that before the last election the figure was 923,000 and on a rising track. Thankfully, that figure is now beginning to come down just a little, although of course not fast enough.
	I want to devote my contribution to what is happening in the north-east of England. I think that there is something else missing from the debate here. It is more than a scheme or a government grant; it is telling young people that there are opportunities out there if they search for them and are willing to push for them. Before the last election, the north-east suffered a series of blows to employment, with the job losses at Nissan and the shelving of the Hitachi trains order. I know that the noble Lord, as Secretary of State, argued vigorously with his friends at the Treasury over that order, but it was shelved. That was followed by the closure of the Corus steel plant. However, over the past couple of years, we have seen the reopening of the plant; we have seen Nissan recruit 2,000 people directly or through the supply chain, and we have seen the £4.5usb billion Hitachi trains order go ahead, and that will create 1,000 jobs in Newton Aycliffe. In recent weeks, we have seen Offshore Group Newcastle announce 1,000 new jobs building foundations for wind farms. Moreover, over the past year the number of jobs in the accommodation and food services sector in the north-east has increased by 9,000, up by 12.8%; jobs in science and technology in the north-east have increased by 8,000, or 13.6%; and the number of jobs in the arts and entertainment have increased by 22.4%.
	I make those points not in any way to diminish the fact that there is a very serious problem but to stress that if we drum into young people that there are no opportunities, the situation is absolutely dire and there is no hope, we should not be surprised to find that that is the world view they take, asking themselves, "What is the point of applying?". There are things happening.
	Government have a role in this. It is not just about what the private sector is doing; the Government have a role and a social responsibility, and that is referred to in the title of this debate. I would argue that they are exercising that role in a number of ways. As the ACEVO report mentioned, what we need more than anything else is job opportunities-we need businesses to create more jobs. Therefore, it is very important that we see things such as corporation tax being reduced from 26% to 24% and then to 22%, and the freezing of business rates, and it is important that new start-up companies will not have to pay national insurance contributions for the first year when taking young people out of unemployment. These things make a difference. We have seen £1 billion going into the Youth Contract. In addition, the regional growth fund has invested £157 million in the north-east of England, with 33% of the projects that the fund has committed to being in the north-east. Get Britain Building was a programme announced in the Budget, with £28 million invested in the north-east, delivering 750 homes and supporting more than 1,500 jobs in the construction industry.
	The north-east is home to two of the enterprise zones. Of course, there is also the element of making work opportunities-particularly low-paid work opportunities-attractive to young people. Raising the tax thresholds, which has taken 84,000 north-east people out of paying tax altogether, is making those positions more competitive and giving people a better wage than was the case before those thresholds were raised. We have seen the number of apprenticeships in the north-east rise by 87% in the previous year-up from 18,510 to 34,550. There is absolutely no doubt that more can be done, but my argument is that a lot is being done and the picture is not as dark as it is sometimes painted in the media. There are opportunities out there and we ought to encourage people to realise their dreams and use the full talents that they have been given.

Lord De Mauley: My Lords, I draw noble Lords' attention to the fact that Back-Bench contributions are time-limited to 7 minutes.

Lord Bhattacharyya: My Lords, I thank my noble friend Lord Adonis for securing this debate. As a former apprentice school governor, I declare my interest as chairman of Warwick Manufacturing Group and of being involved in industry all my adult life. This subject is very close to my heart.
	My noble friend has set out the scale of the crisis. To take just one example, last year saw a 15% increase in long-term youth unemployment. It would be easy and largely justified to blame the Government for that increase, yet youth unemployment is not only a matter of fiscal policy and Work Programme funding. Young people in Britain are particularly exposed because of the structure of the British economy. We know this because youth unemployment was rising well before the financial tsunami.
	Britain's youth unemployment rate increased by a quarter in the three years to 2007, while the economy grew, so for long-term solutions we should perhaps look to countries that have low youth unemployment in good times and bad. Where do they focus? They focus on preparing young people for work. That is where we fail. We abolished our vocational technical colleges with the best of intentions. As technical colleges became universities, many lost their focus on employability for all. Vocational sub-degree courses went and work placements vanished. That was the wrong path to take.
	We should look instead at fast-growing Brazil, where the number of students at technical colleges has quadrupled in 10 years, with one in four students doing a degree. Today, the Brazilian Government are building 150 more technical colleges. In Germany, the dual system of vocational education means companies pay to train the young, so they can hire the best workers after they get their Berufsabschluss. For Britain, the best example is perhaps Japan where youth unemployment has stayed incredibly low, even in the "lost decade". Japanese technical colleges-the senmon gakko-educate a fifth of all school leavers in vocational courses. Tuition at senmon gakko costs more than in most universities, yet many students take a vocational course alongside their degree, such is their value in getting a job.
	At secondary level, technical kosen schools which take students to higher education on a vocational path are massively oversubscribed. Both kosen and senmon gakko graduates have outstanding employment rates. In contrast, we in Britain fail too many young people not on track to "traditional" higher education. Employers report low basic skills and young people are too often left with qualifications of little value. I know that the company Jaguar Land Rover with which I am very closely involved cannot get youngsters to go there.
	We have discussed this for 30 years and more, yet far too little has changed. As in Japan, we need better technical education at both secondary and post-16 levels. Of course, schools must first give all pupils the essential foundations of technical education, literacy, numeracy and science. We should also encourage innovation in technical education in university technical colleges, which my noble friend Lord Adonis talked about. I am delighted that we will have a university technical college in Warwick, but Britain needs more like it; we should have hundreds of them.
	Next, we must transform vocational education after 16. There is huge demand for skills that are worth something in the jobs market. Young people apply for quality apprenticeships in huge numbers, but we have far too many useless skills providers. An easy way to make money is to set up as a training company, latch on to a funding body and provide some low-level vocational "qualification". Sadly, we saw examples of this during the jubilee. To stop this, the Wolf report proposal of letting funding follow students rather than courses will reduce incentives to offer confetti qualifications.
	Finally, we must introduce the values of the Japanese senmon gakko into all our higher and further education colleges. We need more flexibility, more modularity and more integration between courses and the jobs market. Some may protest at the factory floor arriving in the groves of academe. However, a law degree from Cambridge is also part of a well rounded vocational education. For apprentices as well as lawyers, vocational education must be a path to the top, not a dead end.
	Young people are ambitious. We must be with them and create a route from apprentice to doctorate. I am a graduate. I did my apprenticeship and then a doctorate, which was paid for by the company that I worked for. Sadly, we see too many examples of where the Government have failed in this area. There have been many courses. I blame industry, too. It whinges left, right and centre that we do not have enough skills, but it should pay for them. In my case, industry paid. In all other countries, it pays. Of course, the Government must help.

Lord Roberts of Llandudno: My Lords, I, too, appreciate being able to take part in this debate, initiated by the noble Lord, Lord Adonis. What has struck me already is that we are all thinking in the same way. We are dreaming the same dreams and talking of young people not as statistics but as people with a personality, talents and skills that they can contribute to society. We are thinking about a generation of young people throughout the world who are without jobs and without a purpose in life. This can be a catastrophe not only for them but for society. I know from studying statistics on the Welsh valleys that with a high level of unemployment your level of health goes down, your dreams for young people change, and your whole attitude to society changes. We need to tackle this in a serious, cross-party way. I am glad that there has been no tribal discussion this morning.
	The growth in youth unemployment between 2007 and 2012 was mentioned. It has occurred not only in the UK. In Denmark it is up from 7.1% to 15.1%; in the United States from 11.7% to 16.4%; in Poland from 18.5% to 26.7%; and in Spain from 19% to 51%. The problem is worldwide. In the UK it rose from 13.6% to 21.9%. We can see that the growth began before any talk of recession.
	We can also see that unemployment is spread unevenly across the United Kingdom. The north-east has twice as many people out of work as the south-west. Birmingham has many areas where more than 20% of the population are out of work. In one constituency in Scotland, which happens to be held by the Liberal Democrats, only 1.2% of people are unemployed. There are dramatic differences. In Merthyr Tydfil and the Rhondda valleys, unemployment always touches 20%. It is unevenly distributed.
	Areas that have already suffered from unemployment-I think of the Welsh valleys in the 1930s, where unemployment sometimes reached 40% or 50%-are again those that have been most affected. I suggest that one thing we could do is target areas in greatest need and make them areas of action on youth unemployment. We should target many resources to those areas.
	Noble Lords have already mentioned the way in which structural unemployment in the UK has grown. In 2006 it was 13.6%, in 2010 it was 19.6% and today it is nearly 23%. This is a structural matter. I welcome the Government's initiatives, but in a way they are like Elastoplast; they are not launching a big operation to treat a major need. Whichever Government take over at the next election, they will face the same problem of structural unemployment. Now is the time for us to forget party differences and for all of us to work together on this; otherwise we will be faced with a dilemma that could lead to serious consequences.
	I think that I welcome the increase in the retirement age to 67 from 65. It does not affect me any longer, but it will create less opportunity for the younger age group to find work. Can we not have legislation that eases people out of work? When I was 65, I thought that I still had a few good years to go. Could we not reduce older people's working hours to ease them out of employment while, at the other end, allowing youngsters to be tapered into it? Those who have many years experience in their job could mentor the young people entering that job market.
	About a month ago I was with the Deputy Prime Minister in Llandudno at a meeting with apprentices. When we asked the apprentices what kind of careers guidance they had received in their schools, I was astonished to see that there was a thumbs down in nearly every instance. Careers guidance needs to be tightened. I know that there is legislation proposing to do that, but I would also like to ask the Minister how well we are doing in improving careers guidance so that youngsters are treated as people and not as statistics. When they go to Jobcentre Plus they should not be faced by some kind of mechanism or by the internet but by a person who takes an interest in them. Careers guidance should be there for them not only for their first job but for the years to come. It should be a lifelong experience of learning and talking over their problems, because people change and develop various skills and aptitudes as life goes on.
	I have mentioned in this Chamber before that we need to have a Minister dedicated to tackling youth unemployment. Many strands need to be gathered together: the Department for Work and Pensions as regards retirement, the Department for Business, Innovation and Skills, the Department for Education and the devolved Administrations. We need to introduce a co-ordinated approach where everyone, perhaps under one Minister, can talk together and say, "Yes, we can bring those strands together more effectively than we do at present".
	I urge the Minister to agree that we should go for one Minister and establish action areas to tackle youth unemployment. We should consider easing in at the younger end and easing out at the older end. We should also ensure that personal skills and careers advice is given to youngsters so that they can look forward to a career that makes the best use of their talents and therefore contributes to the well-being of every one of us.

The Lord Bishop of Chester: My Lords, I gladly support what has been said in the debate so far. I particularly pay tribute to the brilliant way in which the noble Lord, Lord Adonis, introduced the debate. The noble Lord, Lord Roberts, is a Methodist minister and I hope that he will not find anything tribal in my contribution from these Benches. Indeed, at one point he might even find me singing the same hymn to the same tune, which will be wonderful.
	I wish to approach the issue in not quite the same way as other noble Lords have so far but simply from its moral dimension. I shall try to tease out how to approach it in that way. Nurturing the next generation is arguably the most important task and challenge facing any society. Of course, this does not apply only to humankind but is true throughout the created world. In the animal kingdom it is rather hard-wired. One has to think only of the way in which a mother bird or a lioness will defend its young, or the incredible feats that birds undertake to migrate to their proper breeding grounds. As I say, it is hard-wired into the rest of the animal kingdom.
	One of the problems of being human is that we have an ability to override our hard-wiring in a way that is not open to those who do not have the precious commodity of human freedom. Let me put this in terms which may resonate here and there in the Chamber. We have been placed in the garden of paradise, but we have eaten of the fruit of the tree of the knowledge of good and evil. I could be tempted to add, "and there is no helping us", but I shall leave that thought on the tip of my tongue. Let me put it in different terms. Human life, uniquely in the created world, for all its glory and beauty, is prone to a certain dislocation that is unique to human society. Nature red in tooth and claw is complicated for us by the moral possibilities, or indeed immoral possibilities, that human beings have uniquely to confront. That can produce the Mother Teresa, the Gandhi and the Mandela, or it can produce the Hitler, the Stalin and the Pol Pot in equal measure. I say this because I believe that the phenomenon of youth unemployment presents at its heart a moral challenge. Of course it has social and economic aspects on which we will probably concentrate in the debate, but unless it is regarded first and foremost as a moral challenge, I suspect that what we come up with will tend to be superficial, sticking-plaster solutions.
	I shall address two of the moral dimensions which are quite tricky to get right, and I should like to hear the Minister's response to these two issues at the end of the debate. The first is what I would call intergenerational equity, a point just touched on by the noble Lord, Lord Roberts. Let us not underestimate the great change that has happened. The younger generation of today is facing a much more difficult time than my generation did. This is a reversal after several generations where the younger generation had it easier than the preceding one. We have now gone backwards. When I left university 43 years ago-incidentally, at the same time and place as the Minister-the thought did not occur to me that there would not be a job when I graduated. It simply was not on our radar. How times have changed since then. The thought that, in my 20s, I might have to go back to my parental home because there was nowhere else to live would hardly have occurred to me then. Given the reversal we face today, life is tough for the younger generation in a unique way.
	My question is this: does the older generation, my generation, feel a responsibility towards the younger generation to do whatever needs to be done to address and alleviate the deep social evil of large-scale youth unemployment? I return to the issue of the retirement age. I understand entirely the reasons for abolishing compulsory retirement ages, but as we have heard, there is a certain conflict between doing that and having a society with large-scale youth unemployment. Ideally, of course, there would be no conflict, but rights often have to be balanced. Indeed, the term "right" has an absolute sound to it and we do not think that it must be qualified and balanced against other rights. If we were in a period of good and steady economic growth, perhaps I would not be too anxious on this point, but if we are in a period of endemic low growth, my fear is that the rights we give to older people to work as long as they like comes into conflict with the proper needs of the younger generation. How, as a society, do we address this?
	Other societies deal with this in their own ways. In other parts of the Anglican communion, young people are simply found work within the extended family-the village community-so it is managed. I know of communities in this country where young people in a particular ethnic group or community are found work, because that is what the community does through the ethos of the extended family. We seem to have lost that, so how do we gather it back as a society nationally? We are facing a very difficult issue.
	My second and concluding moral question concerns what I call international equity-equity between nations-and I refer here to the free movement of labour within the European Union. Again, I am entirely in favour of it in principle, but because of the role of English in the international world now, there will tend to be more people wanting to exercise the right to work in England than in some other countries. That is simply the way the world is. What happens, then, if there is serious competition for jobs with our own young people raised in this country? What research is being undertaken to look at this problem, to see whether it is a problem and, if so, how to address it? We cannot simply carry on thinking that it is too difficult an issue to confront.
	I will end where the noble Lord, Lord Adonis, ended, with vacation jobs. One of the tragedies today is that there are so few of those sorts of jobs available to students and other people just to get some experience of work. In my generation, we all learned so much from that sort of work, getting our foot on the ladder. In my case, it was being a dustman. It was the easiest thing to do: work for six weeks emptying the bins and then with the money I would go and have a holiday. I spent six months of my life being a dustman. It taught me a great deal-and language I do not use much these days. No doubt the Minister will have his own story to tell.

Lord Wood of Anfield: My Lords, the current downturn has now lasted longer than not only the recession and slow recovery of the early Thatcher years but the great depression of the 1930s. In both these previous cases, GDP-national growth-had returned to its pre-recession level by the 50th month, just over four years after the onset of the decline. However, today, in June 2012, UK GDP is still more than 4% below the level at the beginning of 2008. As well as the short-term impact on living standards and jobs, this depression, which is what I think it is, will create numerous problems, as we all know, for public finances, living standards, skills and business prospects. But surely primary among the concerns that we all have for the legacy impact of this depression is the effect on youth unemployment.
	There is a traditional pattern to the debate about unemployment. Those who prioritise economic efficiency tend to caricature those with a concern about the human cost and the social consequences of unemployment as utopian bleeding hearts who do not have the interests of a strong, dynamic economy to the fore. Meanwhile, those concerned with the unemployed and their life chances tend to caricature their opponents as heartless Dickensians putting the interests of business above the interests of working people and their families. If there is a choice between caricatures, noble Lords will not be surprised to hear that my own sympathies tend to the latter, but both views strangely converge on a separation between the economic dimension of unemployment and the social and personal dimension.
	I do not believe that this separation makes sense because the evidence strongly confirms that prolonged periods of unemployment not only have severe and long-term consequences for the individuals affected but are very bad for our economy as well. Labour mobility, including occasional transitional phases of unemployment, is of course a necessary lubricant to structural change in a dynamic economy, but seeing large-scale and sustained unemployment, particularly among young people, as a necessary price for the rebalancing of the economy, raising productivity, containing inflation or incentivising greater effort is just plain wrong. It is an economic mistake, it is not supported by evidence, and it is not just prompted by a lack of compassion.
	Other people in this debate have talked, and I am sure will talk, about the considerable human and social cost of youth unemployment. For example, there is now overwhelming evidence that prolonged spells of worklessness are linked to significant increases in rates of suicide, cancer and divorce. There is also a transmission effect across generations; we know that unemployment among adults has been shown to have an effect in reducing the earnings of their children when they enter the workforce later. These considerations alone should give us cause to prioritise youth unemployment more than I fear is being done at the moment, whether in good or bad economic times, but I would like to spend three or four minutes looking at the economic effects of unemployment, which are often cited, wrongly I think, in mitigation against the social and personal effects.
	From a macroeconomic point of view, the current economic crisis is a curiosity on the unemployment front because the labour market performed relatively well during the initial contraction in 2008-09. In that period, the recession inflicted a fall in GDP of about 6%, which was far worse than that in the recessions of the 1980s and 1990s, with a full six quarters of falling output. However, whereas in the previous two recessions the fall in employment was broadly in line with the fall in GDP, in this recession, the fall in employment has been much less, at around 2%.
	The worrying side of unemployment is this: although the rise in unemployment has been less than might have been expected initially, large-scale unemployment has persisted far longer than previous recessions would lead you to expect. In the 1990s, Britain came out of recession at the end of 1991 and unemployment started to fall six quarters later. However, in this downturn we came out of recession in autumn 2009, but nine quarters later unemployment had continued to rise, to 8.4%. This was even before Britain entered a double-dip recession.
	Unemployment has risen among all age groups, especially in the past 18 months. This is the result not just of economic stagnation but of policy change. The youth labour market has performed particularly badly in the most recent downturn, rising from 14% to 20%, then stabilising in the middle of last year, before deteriorating further and rising to 22%.
	What are the economic effects of this? One consequence of prolonged high levels of unemployment is an increase in the rate of structural unemployment in an economy. We know that shocks that increase unemployment affect the structural rate of unemployment more the longer they persist.
	Secondly, far from promoting more efficient labour markets, workers with a history of unemployment-in young people's case, with little or no history of employment-are often offered less secure jobs because they lose valuable work experience or skills while they are unemployed, or because their unemployment experience is seen by employers as a signal that they are not good enough or are low-productivity workers. Youth unemployment takes people off the ladder of skill and career progression, or away from means that they can never get on to it.
	Thirdly, economic evidence suggests that unemployed workers may lower the wages that they think they can get as time passes and accept poorer-quality jobs that are more likely to be eliminated, and so are more likely to experience further unemployment. Repeat spells of unemployment go hand in hand with jobs that are low paid and unstable.
	Fourthly, we know that entry into the working population at the start of a recession is more than just bad luck; the longer you spend unemployed or economically inactive in your youth, the greater the prospect of longer periods of unemployment later in life. On average, each one of the quarter of a million or so young people who have currently been unemployed for more than a year will spend around a further year in unemployment and a further year in economic inactivity in the near future.
	Lastly, we also know that a wage effect casts a shadow into young people's futures. As well as reducing employment prospects, youth unemployment means lower future wages than you would otherwise expect. Research suggests that someone who has had a spell of unemployment of more than a year in their early years of work will have average pay at the age of 42 that is more than £7,000 less than that of someone who has not suffered unemployment.
	These considerations destroy the idea that what may be painful for individuals is beneficial for our society or economy, that the short-term transition impact of unemployment may somehow be a necessary adjustment for long-term efficiency, and that what is suboptimal from a social point of view is optimal from an economic point of view. It is depressing to hear people argue that youth unemployment is down to young people's reluctance to take jobs. That is a misunderstanding of the economics of the moment. I find it more depressing still to hear the argument that, when it comes to unemployment, there is a choice between what is in our collective economic interest and what is in the interests of the more vulnerable in our labour market. Unemployment is not medicine; it is a sign that something is going wrong.

Baroness Sherlock: My Lords, I commend the noble Lord, Lord Adonis, on an incredibly impressive start to the debate. In case there is a noble Lord present whom I have not bored on the subject, I should declare that I serve as a member of the small, cross-party Riots Communities and Victims Panel, which published its final report in March 2012. We are still awaiting the promised government response, which will be any day now, I am sure.
	In touring riot-hit spots around the country, we asked people why they thought the riots happened. Lack of opportunities for young people came up everywhere we went. I do not for a moment posit any simplistic causal link between youth unemployment and rioting, but the issue was raised so often that we felt as a panel that we had to look into youth unemployment alongside other issues, so we looked at the various steps that are being taken and the schemes that are being used to help young people into work, and made a series of recommendations.
	With regard to the Government's Work Programme, the panel questioned whether the payment structure built in enough incentive to those providing it to work with the most difficult cases. We were concerned that, for example, if someone was an entrenched NEET, to use that term, and the provider had not managed to get them into work after a significant period, there was not much incentive to carry on working with or investing resources in them. That suggested that targeted intervention was needed. The panel recommended that there should be a joint central and local government intervention after someone was unemployed for a year and that any claimant still unemployed after two years on the Work Programme should be offered a guaranteed job and additional support. There was a clear feeling that people should not be parked on the Work Programme and not moved on. My view is that we should intervene far earlier than that, but that was the shared view.
	There are various ways to guarantee someone a job. The most common ones that we hear about are wage subsidies or incentives for employers, but I also want to highlight the use of intermediate labour markets. During my time as an adviser in the Treasury, I spent many happy hours discussing the cost/benefits of intermediate labour markets with officials, and I suspect that the Minister may have had similar experiences. I have always been rather a fan of ILMs, but as I am sure the Treasury has pointed out to the Minister, they are expensive and times are tough.
	However, if we look at both sides of the account book, as my noble friend Lord Wood showed us so eloquently we begin to see the extent of the economic problem caused by having so many young people not in education, training or employment. For example, it is estimated that the cohort of 2008 NEETs will cost the UK economy £22 billion and the taxpayer £13 billion over their lifetimes. In three local authority areas alone, the estimated direct cost to support just 1,989 NEETs for one year is £14.8 million: almost £7,500 each. The extra costs to the public purse-for example, through benefit claims, crime or mental health-related issues-were estimated at another £40 million.
	In other words, the costs of inaction are extremely high. ILMs have been shown to work well. Research from the Joseph Rowntree Foundation found that, properly managed, ILM programmes can deliver more sustained progression from welfare to work than other programmes for the long-term unemployed. More than 90% who get a job are still in work after six months, compared with just 40% in other programmes, and their longer-term earnings tend to be higher. An evaluation of ILMs in Australia found that the benefits consistently outweighed the programme costs.
	My second point is the regional dimension touched on by the noble Lords, Lord Roberts and Lord Bates. The touching optimism and commendable positivity of the noble Lord, Lord Bates, notwithstanding, my experience in my home town of Durham is that there is considerable unemployment among young people and considerable fear about the future. There is a growing challenge: as young people still in school look at their older brothers and sisters leaving school and not getting jobs, it becomes even harder to persuade them to stay on and work through to their full potential.
	Has the Minister seen the latest edition of the Northern Economic Summary from IPPR North, which showed that the number of NEETs is highest in the north of England, at 19%, compared with just 16% in England on average. Furthermore, the amount of time people are spending on JSA is increasing. Almost half those claiming JSA in the north have been doing so for more than six months, with the average length of time for which people are claiming benefits more than double what it was during the 2008-09 recession. That goes to the points made by the noble Lord, Lord Wood, about the risks of the depth of unemployment this time around and the consequences for the economy as well as the individual.
	IPPR North suggested that unless targeted measures are introduced to help young people urgently, the gap between the north and other regions in the number of NEETs is likely to carry on growing. Interestingly, its solution was not dissimilar to that reached by the riots panel. It concluded that the Government should offer a guaranteed job paid at the minimum wage or above to anyone who has been unemployed and claiming JSA for more than 12 consecutive months. It proposed that the guarantee should be matched by an obligation to take up the job or to find alternative that does not involve claiming JSA. It suggested introducing that on a targeted basis: for example, for people living in areas where the job density ratio is twice the national average.
	Many noble Lords have commented that there is potential cross-party agreement in this area. Certainly we can agree on one thing about youth unemployment-we are all against it, but we would like a step beyond that from the Minister. I want to hear a sense of urgency in tackling the problem. There is always the risk that we feel that unemployment is always there, but the noble Lord, Lord Wood, made the case that it has not always been here on this scale. If we go back to the situation of the 1980s, as described by the noble Lord, Lord Adonis, the country as a whole will suffer considerably.
	The economic case for action has been made. I also agree with the right reverend Prelate the Bishop of Chester that there is a moral case. For me, it is simple; the core job of government is to so order society as to enable its citizens to flourish. I spend too much time going around the country meeting young people who, by the age of 19 or 20, already feel that they have no choice, that their life course is set and that they will never achieve the kind of things that other people took for granted. It is up to us today, and I want the Minister to take a lead. What steps will the Government take to ensure that those young people have hope and that we as a country can live with the consequences of our policies?

Lord Ramsbotham: My Lords, I, too, congratulate the noble Lord, Lord Adonis, on obtaining this important debate and for the way in which he introduced it, which reflects entirely the motivation and determination he showed when he was a Minister in the education department.
	While echoing many of the things that have been said around the House, I want to think outside the box. I do so because what has been said recently, particularly in connection with the riots, has stimulated three questions which have been in my mind for a long time. They are unconnected, but one was particularly stimulated by the right reverend Prelate the Bishop of Birmingham in our recent debate on the report on the riots. I have long believed that the only raw material that every nation has in common is its people, and woe betide it if it does not do everything it can to identify, nurture and develop the talents of all its people, because unless it does so, it has only itself to blame if it fails. That is a burden on all of us, not just our educators.
	The second question refers to a visit that I paid to the Indian Army in 1973, including the state of Orissa in East India. That evening, we had an audience with the very impressive governor of the province. I said to her that I had noticed, driving around Orissa, that I had not seen a single agricultural machine, all I had seen were people with hoes and spades. She said: "You tell me which is best. Is it best to have machines producing more than you can use; or is it better to have everyone in employment?". It is a question I have never been able to answer.
	The third question refers to when I was commanding Belfast between 1978 and 1980. During that time, I used to see a great deal of a very interesting politician called Paddy Devlin, one of the founders of the Social Democratic and Labour Party, who was imprisoned in the 1950s as a member of the IRA but was a very distinguished Minister of Health in the short-lived power-sharing executive in 1974. During that time, there was a proposal that a car factory should be developed by a firm called DeLorean on the interface between the Catholic and Protestant areas, employing people from both sides, but the Catholics did not have a tradition of working with metals in that sort of industry. The Government established an employment centre in Turf Lodge, in the heartland of Catholic west Belfast, to start training people to get jobs in the DeLorean factory. That was objected to by the IRA, who sent in the 10 year-olds to try to burn it. They failed, so the 14 year-olds put in. They did not do it, but the 16 year-olds made a much better job of it, which left a derelict site which I then took over as a base.
	During that time, I had a long talk with Paddy about unemployment in the area, because I was concerned that there was nothing for people other than that. He explained to me that one reason why the IRA burned the DeLorean training centre was because it did not want people to be employed. He said that a man wants to earn enough money to feed, clothe and house his family, to have a holiday and, occasionally, to change the wallpaper. If society produces that, he will support it. If society does not, he will not. If there was therefore a possibility of that happening and driving people away from the IRA, it wished to bring them back in. At the same time, Paddy asked me if I knew how many unemployed there were in that part of west Belfast. I said that I did not but that I would try to find out, so for July 1979 we counted all the men of employable age and what they did during that time. We found that the unemployment rate was about 80%. I mentioned this to Paddy and he said, "I would not have been surprised if it was 90%".
	To echo very much what the noble Lord, Lord Roberts, said, it is therefore terribly important that instead of taking figures which represent an average over a whole area, we should identify hotspots. This brings me to there having been some figures in the report on the riots which struck me as being very important. They were perceptions: the 83% who felt that youth unemployment was a problem in their area and the 71% who felt that there were insufficient opportunities for young people. Only 22% felt that public services were doing enough.
	In that climate, we then find talk of youth contracts, payment by results, career support guarantees, youth job promises and apprenticeship programmes but I am bound to ask: for what? Are the jobs actually there which can be operated by the young people to whom we are promising all these guarantees, supports, results and so on? Have we ever analysed exactly what the situation really is in terms of the availability of jobs? We live in an era when, as one found in Orissa, machines are taking over from men and labour-saving is the phrase, so where are these jobs? I ask that because it is hugely important that the Government should establish precisely what the job situation is going to be before making all these promises. There is nothing worse than to make promises that are totally incapable of being kept, particularly to the young. With the disillusioned young, they will lose not only this generation but other generations for the future.

Lord Giddens: My Lords, I congratulate my noble friend Lord Adonis on having secured this debate and on introducing it in such a lucid and compelling way. To quote him, I say, "Oi! I would give you a job any time", although my noble friend has held a lot of interesting jobs.
	As the noble Lord, Lord Roberts, said, youth unemployment is a gigantic problem across the world. In the Middle East and north African countries, more than 90% of young people aged 16 to 24 are not in work. A high proportion of those young people are NEETS or, as they like to say in continental countries, ninis-neither in education nor work. Ninis is a slightly more compact way of putting it. Indeed, youth unemployment was one of the sources of the Arab spring, as we know. Twenty per cent of young people in the EU are ninis and, as has been mentioned and as is very familiar, the problem is especially acute in Spain.
	I ask noble Lords to remember that measuring unemployment is very complex. Sometimes it is better to measure by rates but often it is better to measure by absolute numbers, as long as you factor in population growth and so forth. It is very important to be precise about the statistics that one is using. However, these statistics clearly show that in a global society, there is a structural problem of enormous significance with potentially long-term consequences. To summarise what other noble Lords have already said, it could be said that youth today, in industrial countries and in the UK, faces a perfect storm. I will mention three factors here.
	First, this recession-it may be a depression, as my noble friend Lord Wood said-is no ordinary recession. It seems, to me anyway, to be in some part a crisis of competitiveness in western countries as a whole, which will be very difficult to repair and which will demand large-scale restructuring. There are no easy options for us here any longer and the processes of reconstruction will bear heavily on young people, even if only on the "last in, first out" principle.
	Secondly, as the right reverend Prelate mentioned, the older generation now has a stranglehold on resources-for example, in the housing market or, in future, pensions. My source is in some part The Pinch by David Willetts MP, an interesting discussion of intergenerational inequality. Younger people are bound to struggle in such a situation. It implies that we must have greater intergenerational equality. I would dispute to some degree what the right reverend Prelate said about early retirement ages because countries that have those, such as the southern countries in Europe, also tend to have high levels of youth unemployment while countries in the north that have a very high proportion of older people in employment, such as Finland, also have low rates of youth unemployment. Those things are not necessarily oppositional.
	Thirdly, it is very important that a major part of what restructuring will involve is that fundamental changes are happening in labour markets. There is a leap in the levels of job destruction, primarily as a result of the impact of IT and automation, as has just been mentioned. The lifespan of an average medium-sized firm today is only about one third of what it was in the 1970s and therefore young people today will face a very volatile job market. For that reason, I have some reservations about apprenticeships-at least, in how they should be structured-because life skills and adaptability are likely to be as important as technical skills. We just do not know when a technical skill will become obsolete. It could happen almost overnight as it did, for example, in the printing industry some years ago.
	The level of youth unemployment in this country is lower than in many other EU countries but, as the noble Lord is especially prone to say, if you measure it in absolute terms its increase is perhaps not as great as some critics argue. However, it would be a great mistake to try to normalise these statistics because young people are going to face the very demanding structural conditions that I have just mentioned. For these reasons, the crisis is too deep to be addressed simply by active labour market measures. I am not necessarily against the youth contract, the Work Programme and so forth-they are mostly continuations of new Labour policy under other names anyway-but those are really palliatives, even if a lot of money is spent on them.
	I have three questions for the Minister. Macrostructural intervention is likely to be far more important but here the Government's cupboard is worryingly bare and their policies on job generation are alarmingly weak. First, where will new net jobs come from? In this country we have, as it were, a primitive policy of deregulation which I do not think any other country in the world is following today. Surely more active collaboration between government and business is needed, as are more long-term planning and a more active industrial policy than the Government have.
	Secondly, how will the Government confront inequality of a structural nature, which has a massive impact on long-term youth unemployment, and what is their position on the need to further reduce child poverty where, after all, new Labour has been pretty successful? I am in favour of a tax that would switch from the very rich to the very poor. That is a sensible and, now, a feasible idea.
	Finally, the Government should be boosting numbers in higher education rather than cutting back. Countries in the southern rim-Spain and so forth-have about 40% in higher education, like us. Successful countries such as Germany or the Scandinavian countries have 53% to 60%, which has the dual function of keeping people out of the labour market and getting them into jobs. I welcome the Minister's comments on these points.

Lord McFall of Alcluith: My Lords, I am privileged to participate in this debate. I congratulate my noble friend Lord Adonis on his compelling and lucid exposition of the problem and the way forward. As my noble friend Lord Giddens said, this is a complex problem, and we have to see it in the wider context of inequality and global unemployment. According to ILO figures, there are 75 million unemployed people aged between 18 and 25. The first thing the Government should do is to look again at growth. That has been missing from this agenda, and it is very important that we look at it.
	There have been recessions in the 1980s, the 1990s and now. After each recession, youth unemployment went up, but since this recession youth unemployment-those without work and not in education-has increased by 232,000. Mention has been made of the Labour Government's target to eliminate child poverty by 2020. That was not fully achieved, but the figures today show that 900,000 young people have been taken out of poverty. That is a cause for some celebration, but there is much to do. I suggest that the Government copy the Labour Government's 2020 target for child poverty by having a similar target for youth unemployment. The first priority should be to reduce it to pre-recession levels using jobcentres. The Labour Government used jobcentres, when they were revamped, very well to get people into employment. Establishing a youth employment and skills service would be very important in that area.
	The Government need to be mindful of the welfare cuts of £2 billion that took place on Good Friday this year. There has been talk of an extra £10 billion of welfare cuts. It is very important that the Minister says that that will not happen, because the cuts that have taken place have already affected low-income families and people looking for jobs. Today's Daily Telegraph reports the Secretary of State for Work and Pensions saying: "Get a job, IDS tells parents on dole; Working at least 35 hours a week is only way to lift children out of poverty". We agree, so we are looking for government proposals to see how that is done. The overriding message today has to be that it is not the private sector that is going to do this. We are facing massive deleveraging. As the noble Lord, Lord Giddens, said, this recession is going to take many years to sort out. We are talking about a decade or more, so a government initiative and an active welfare state are very important.
	The Government could illustrate their commitment on that by ensuring that each government department-indeed, each government Minister-has a number of such young people. If the Prime Minister were seen coming out of Downing Street into his car with a couple of young unemployed people behind him, it would send a powerful visual message that the Government were taking this issue very seriously. A Minister for Young People, particularly unemployed young people, is very important.
	Education has been mentioned. Education is the way forward. I left school at 15 or 16. My second chance came by going back to night school, then to further education and then to university. For me, that was the pathway forward. It was my salvation. We cannot emphasise enough the need for education. The suggestions that have been made to the Minister today should be taken very seriously. We should use further education colleges, particularly in the technical skills areas and local areas, to foster that extra employment for young people. Above all, the economy needs to be rebalanced. There is a growing north-south divide. I know that from representing an area where employment has consistently been relatively high. I suggest that there are still lessons to be learnt from the Mittelstand in Germany and from the Fraunhofer Institute about how they integrate manufacturing and education. A lot could be made of that issue.
	We are establishing a forgotten and invisible generation, particularly those without skills or qualifications. I saw that when I was a deputy head teacher in the 1970s in Glasgow. I was put in charge of a truancy unit, as it was called, for children who did not come to school. They were demotivated at such an early age. They were alienated, and it was very difficult to get them to engage. The message is that we should not give up. We need a more intensive approach in education. My noble friend Lord Adonis made a number of very valuable suggestions on education, which I think the Minister has taken on.
	As a former teacher, I have also seen the long-term effects when young people leave school alienated and disillusioned. It has been my sad experience to meet some former pupils 10 or more years later. They have a partner or a wife and children, but when you ask them about their job, they say they have never had one. Between 18 and 25 are the precious six or seven years. Experience and statistics show that if we do not get young people at that time, we have possibly lost them for life. That is the message that we have to address today. The overriding question is how we address the insecurity in society. As the right reverend Prelate said, our generation feels that the next generation will not have the same chances. I suggest that economic progress and social stability go hand in hand and, if we do not tackle youth unemployment with vigour, we are destroying the future not only for young people in this generation but for all in society.

Lord German: My Lords, I too pay tribute to the noble Lord, Lord Adonis, for securing this debate. I shall say a few words later on about his opening remarks because he raised matters of great importance that lie underneath this important issue. As many noble Lords, including my noble friends Lord Bates and Lord Roberts, have said, this is not a new problem. We have seen the number of unemployed young people reaching ever upwards since 2002, but it is acerbated at the moment. Young people are especially badly hit by poor economic times. Employers are reluctant to hire new workers, more experienced workers compete for lower paid entry-level jobs and older workers hold on to their jobs for longer than usual.
	As the noble Lord, Lord Giddens, said, this is not simply a UK problem. It affects the developed world and the developing world alike. Across Europe, the Americas, the Middle East and north Africa, the problems are the same. In its recent youth employment trend report, the ILO forecasts that the current high levels of youth unemployment around the world will continue for the next four years. The growth in the knowledge economy, globalisation and technological change have led to a fall in the demand for low-skilled workers. Entry-level jobs tend to be concentrated in the service sector, and many of them require people to have soft skills. We can think of the people who answer the telephone when you have a banking problem or an insurance problem. They require soft skills and a readiness to be available for on-the-job work from day one. It is regrettable that many of our young people without work are not coming out of the education system with these skills.
	We have a long-term issue with a serious short-term spike, although the short term might extend over two or three years. As with all longer-term, deep-seated problems, a degree of political consensus is required if we are to tackle the long term. In his very interesting opening remarks, the noble Lord, Lord Adonis, concluded that there were areas of great agreement, which is what we are hearing today. For the longer-term problems that we are going to have to deal with, which will span more than one election period, does he have any ideas about how we can promote that consensus over a number of years? Equally, does he have any idea how we can produce it for the UK as a whole? I was interested, and I know that my interest was shared by many people around the Chamber, in the way in which you have to handle the education system and make changes to ensure that we get the outputs that we need. However, I know that those views are somewhat in conflict with those of some of his colleagues currently holding ministerial posts in the country in which I live. If we have a requirement to provide UK solutions to problems of this sort, I wonder how we can best get together and reach that consensus, which cannot be achieved without the education and skills agenda.
	My second point is about the underlying problem that we are trying to solve here. You could address different remarks to different part of the problem, but I agree with the ACEVO commission on UK employment, whose conclusion was that there is a,
	"lack of vision for the 'forgotten half' of young people who are not destined for university or a high quality apprenticeship post-16",
	and that the route into work for these 16 to 18 year-olds was,
	"more like an unmarked ?eld of landmines".
	That drives me to the conclusion that the issue that matters more than any other is those young people who are in the NEET category, a term we have used extensively in this debate. I suspect that that is too general a title but this group is the most difficult to reach, and early intervention is crucial if we are to make a change, which is why the pupil premium is so important in getting in early. In terms of intervention, those people are the most difficult to reach-the high fruit on the tree, if you like; the most tricky to find appropriate solutions for. They become even more important at times of economic difficulty, as more educated younger people enter the jobs market at the lower-skills end, so displacing the unskilled. All the figures now show that a growing number of people are moving into that category of core NEETs.
	I shall give your Lordships examples of pre-NEET work being done in two areas that I know well. The first is at Newport High School in Wales and the second is Bedminster Down School in Bristol. Both these schools have taken pupils from the age of 13 out of the school environment altogether, put them into a community environment and worked with them on trying to raise their skills, with such a level of success that those pupils have achieved a pass rate of five GCSEs or more of about 50%, and about 50% of that 50% are going on to post-16 education. These experiments are probably being replicated around the country. Are we building upon those successful stories of local experience and local work, which may well be replicated by voluntary organisations and schools throughout the country? It is important that we try to meet the substantial needs of this group of young people who are so difficult to reach.
	The youth contract contains a suite of measures, but does the Minister believe that they are yet of sufficient scale to deal with the problems that we are facing in both the short and long terms? I also believe that we will have to do more on the supply side. Most of the interventions that we have been talking about are on the demand side, but we have to work much more strongly with employers. The Chartered Institute of Personnel Development rightly says that employers can and should make a difference by building a relationship with young people from school to labour-market entry. What are the Government doing to support the institute in its campaign to engage more employers? On the demand side, it is really a question of whether the Government have done enough to rationalise the myriad relatively small-scale funded interventions. I know that the Local Government Association is keen that that should happen.
	This debate has been a wonderful opportunity to work together in seeking common solutions, and I believe that it has gone a considerable way towards achieving that.

Baroness Howells of St Davids: My Lords, I thank my noble friend Lord Adonis for raising this subject for debate and for the sympathetic way in which he has outlined his concerns.
	Those noble Lords who have heard me speak will realise that my research is always from the school of life. I would like to take a few minutes to concentrate on the young black British male. From time to time, I meet young British men whose skins are black to discuss their concerns. I would like to share one such story. A 24 year-old with a university degree in quantity surveying has been seeking employment for the past two years. His question to me was: "If you were a young black man, would you go looking for work?". It was a rhetorical question, so I waited. He continued: "I wake at 6 am and switch on the radio, and all you hear is that black boys are criminals-another killing, another raid on a black person's home. If you're lucky, you have a hot drink, get dressed and set off to attend an interview. You take the bus or train, and the papers and the conversations are all about black boys-not black criminals, but all black boys. You sink into yourself and behave as though you were dead or deaf. You arrive for the interview and you feel exposed, you're on show, and not as a quantity surveyor-no one in the room looks like you. You enter into an interview trying to sell yourself. No one is really listening. You want to shout, 'I have the qualifications and all I need is the chance to show you that I can do it'. You see the red faces and what I think are their lying eyes. Would you bother to go for another interview, and another, and another? I have had 50 interviews in two years-no job".
	His story is not an isolated one. Others in the group nodded through everything that he said. What did I say? My answer was to try to convince the young man that he had done his bit and that his only failure would be not to try, attempting to get him to understand that over the past two years he has been experiencing the canker of racism, power and prejudice. Often we are in danger of blaming the victims. In effect, the victims are less blameworthy than those with power who fail to see their potential, beyond the colour of their skin. The excuses are numerous and I am sure we will hear a lot more about this as the debate continues. Most reports have highlighted why unemployment among young black men is higher than white unemployment and have made excuses such as lower educational attainment, attending less prestigious universities, living in areas of high unemployment, migration and sector clustering. All these reasons have some truth but at the base is institutional racism in this society. I refer the Minister to an April briefing by the Runnymede Trust on race and community because it poses cause, effect and possible solutions.
	I return to where I began. Blaming the victim is unhelpful. It is often said that they do not want to work, but I can tell noble Lords that the majority of young black men want the same things as young white men. They want to work in a job that pays a living wage. Despite the failures in the education system, most have managed to prepare themselves for adult life according to ability. Like all of us, they want to be safe from criminals, safe from terrorists and have clear air and clean water. They want time for family and friends so that when they grow old they too can retire with dignity and respect. A life without unfair discriminatory practices, which cut across race, religion, class and language, is all that they ask. The Government cannot solve all these problems, but they should be mindful of how they deal with racism. The Stephen Lawrence report recommended certain steps that could be taken. I sit here and watch those steps being dismantled daily.
	The Government need to take a good look at what has been achieved and stop cutting away at all the good practices that have been put in place-to unlearn the racism. Take a look at what is happening in football: employment for young people, whatever the colour of their skin. Take a look at what is happening in motor racing. Take a look at what is happening to the black teachers who have studied to enter our education system, and at how they, too, are victims of racism. Take a look at the police; they, too, are the victims of racism. How do the Government see them getting justice when these things happen and when the very road towards justice is being cut from under their feet every day?
	We should be looking at what is really wrong with society. Getting a job is a good thing. Being denied a job because you are the colour that you are pervades the black community throughout this country. Some are lucky; some get jobs. Again, they always have to look at themselves in the mirror as a black person and then as a white person. The benefits of looking seriously at black youth may stop you from having to blame them for every evil when the next riots happen.

Lord Touhig: My Lords, I join all noble Lords in congratulating my noble friend Lord Adonis on this debate, which is most timely. I will concentrate my remarks on the challenges faced by young disabled people, in particular those with autism, when they seek to continue education or secure employment after the age of 16.
	Young disabled people at 16 hold the same aspirations to stay in education and find fulfilling careers as their non-disabled friends-a point which was well made in the National Autistic Society's publication The Undiscovered Workforce, which was launched as part of its campaign to increase employment opportunities for people with autism. We know that disabled young people are two and a half times more likely not to be in education, employment or training than their non-disabled peers. Furthermore, just 15% of adults with autism are in full-time paid employment. These are clear signs that the educational provision available to young people with autism is currently not allowing them to achieve their ambitions.
	A host of reports in recent years has evidenced that the transition to adulthood for young people with autism and other disabilities is poor, and that there is a serious lack of educational opportunities for this group. An Ofsted report stated that,
	"the real choice of education and training opportunities at 16 was limited for many young people with learning difficulties and/or disabilities. Inspectors found few courses available for young people with the lowest levels of attainment".
	For many young people with autism, particularly those with complex needs, the choices for post-school learning are very limited indeed. We know that young people with autism want to access employment and training. However, we also know that they need the right support in order to do so. While there is a dearth of education and training available for many young people, young people with autism have far fewer options. The lack of education and training for young people with autism is directly related to youth unemployment. Currently only one in four young people with autism continue their education beyond school, and so are adequately equipped to enter the world of work.
	I am 64. When I was thinking what I should say today, I tried to imagine what it would be like to be 16 and autistic. What would it be like to face the next 50 or 60 years of my life staying at home with parents, family and carers, or living in a residential home? What of your Lordships-what if each of us was 16 and autistic? What if all the experiences, opportunities and achievements each of us has enjoyed in our lives had never taken place? That is the prospect for up to 75% of autistic youngsters: a cruel exclusion. The life experiences that we all take for granted are denied to them.
	That is why post-16 education options are essential to support young people with autism into work and community life. Both of these outcomes benefit society as well as individuals and families. The social impact of unemployment for young people with autism is huge. Not continuing in education or training beyond school leads to a loss of potential for young people and for society as a whole. Failure to provide opportunities for education and training that will lead to employment denies young people with autism the right to fulfil their potential and to contribute to society.
	In addition, there are huge social costs. Failures to provide for young people with autism also lead to higher long-term financial costs. In one of its reports the National Audit Office found that £1,000,000 per person could be saved by supporting young people with learning difficulties to gain life skills and be more independent. It also found that supporting a disabled young person to access work reduces lifetime costs to the public purse by £170,000 per person.
	Is there a solution to this problem? Yes, there is. We can ensure that government initiatives such as the youth contract are accessible to young people with autism and others with disabilities. Can the Minister say how the Government will make the youth contract fully accessible to disabled young people? Can he confirm that the Access to Work funds will be available for young disabled people doing internships and voluntary placements? The raising of the participation age to 18 is most welcome. However, it appears that little thought has been given to what that might mean for young disabled people, many of whom are not in employment, education or training, not through choice but as a result of a lack of suitable provision. The raising of the participation age will only help young people if it coincides with the development of more and better educational settings. Have the Government invested the extra funding that is needed to meet the additional demands of young disabled people who are currently not participating? How have they calculated the level of this need? They must take into account all additional needs, not just those of young people with SEN.
	The charity Ambitious about Autism produced an excellent document entitled Finished at School. It makes a number of recommendations in this document which I believe would improve post-16 education for learners with autism, which would have an impact on levels of employment. The document makes four key points: there should be a clear legal right to educational support up to the age of 25 for young disabled people; a funding system which gives young people and families more information, choice and support is needed; a cross-government focus on outcomes and destinations for young disabled people is needed; and, finally, a further education workforce with the skills to support young people with autism to achieve their ambitions is essential.
	The Minister is a friend-he is a friend of all those who campaign and support people who want to improve the quality of life for people with autism. In my time in this House and in the other place I have certainly found that he has listened. I hope that he will listen to us on this occasion.

The Earl of Listowel: My Lords, it is a privilege to follow the noble Lord, Lord Touhig, and his passionate advocacy for autistic adults and children. I, too, am most grateful to the noble Lord, Lord Adonis, for securing this important and timely debate. I thank the Minister for organising a seminar recently on the employment support allowance. It allowed many of us the opportunity to speak to the manager of a jobcentre-to have the privilege of speaking to someone who had spent much of her life helping adults and young people into employment. It was a very helpful experience.
	I will concentrate on the lack of employment for young people leaving care. They are especially vulnerable because of their poor start in life. They are heavily overrepresented in the NEETs group; a third of 19 year-olds leaving care are NEETs. One sees the consequences too easily. Half of the juvenile prison population have had care experience, as have a quarter of the adult prison population, while one in seven rough sleepers have care experience. The best chance to protect these young people from such poor outcomes and help them into the job market is to give them an excellent experience while they are in care-to seize the opportunity then to build the resilience that they need.
	To concentrate on the most vulnerable group of children in care-young people in children's homes, who are the neediest 7% of the 60,000 children in local authority care-we could do far better to give them that excellent experience. I highlight these children in part because recent child protection failures for girls, with 187 incidents of suspected prostitution coming from children's homes in the past 10 months alone, have highlighted the need for reform. Your Lordships may have noted the reports regarding these children on the BBC news and "Newsnight" last night.
	There is now an opportunity for the Government to ensure that, in future, young people leaving children's homes are far more ready for employment or periods of unemployment. For instance, they might institute an independent inquiry into residential care which could look at the professional qualifications of staff and the possibility of emulating the success of the Scottish Institute for Residential Child Care, which is devoted to training staff. They could seek to emulate the success of initiatives in the teaching profession, looking, for instance, at the Training and Development Agency, the National College for School Leadership and the excellent programme Teach First, about which the noble Lord, Lord Adonis, spoke. That is now being stretched to Social Work First and could perhaps be applied to residential care.
	In social work, the Government could consider copying the College of Social Work and the introduction of chief social workers in each local authority and central government. They might engage with the public in seeking funds and practical help. They might look to the great success of the charity Volunteer Reading Help, which, in partnership with the Evening Standard, raises funds and recruits reading mentors to work with thousands of our vulnerable children in primary schools. Surely many of the public would be moved to volunteer to help children in residential care with their reading. Some businesses might wish to support services for these young people as an expression of their corporate social responsibility. These are all our children.
	The single greatest concern about children's homes is the mismatch between the qualifications of the staff and the needs of the children. In England, we require staff to have a level-3 NVQ in childcare and a manager to have a level-4 NVQ. They are roughly equivalent to an A-level and the first year of a degree, respectively. On the continent, the norm is a bachelor of arts degree, yet as residential care is far more widely used there, the needs of their children-a mixed group-are far lower. Therefore, we have a perfect storm, with often poorly qualified staff caring for very needy, often very challenging, children.
	A project that brought German residential childcare workers to work in children's homes here was undertaken. Professor Claire Cameron evaluated this work and commented that the German social pedagogues,
	"were also rather taken aback by the role of the residential worker in England. They"-
	the pedagogues-
	"had a range of professional qualifications, the majority of them graduates, and some were also equipped to be employed as social workers in their own country, or to work with other user groups as well in a range of other responsible roles. In contrast, in children's residential care their English equivalents have low status and little influence. Their professional input is marginalised and they lack autonomy. They usually refer on to experts rather than take control of issues themselves".
	She went on:
	"Our child care system is over-bureaucratic and risk-averse. History and policy have created this set of circumstances or not altered them. It is unsurprising that our continental visitors often felt bemused and deskilled".
	The author Paul Connolly grew up in a children's home. He learnt to read and write in his 20s, and went on to found a successful business and to publish his best-selling autobiography, Against All Odds. When asked the secret of his success, when so many of his peers had died young, he said that he had always sought to surround himself with successful people. For him, the route out of an abusive children's home environment was a local boxing club and the men there who took an interest in him and encouraged him to become a boxer. Mr Connolly has written to the Children's Minister, saying:
	"I attribute my success to the people who positively influenced me, and my avoidance of negative influences. My experience was that as soon as I left the care system I cut all ties with everyone that was connected, and I surrounded myself with people I could aspire to ... It is so important that these vulnerable children can aspire to somebody that has achieved in life and presents a positive role model".
	There are many fine examples of good practice in residential care, and most of those who work there sincerely give their best efforts for these children. However, government action is needed if a consistent high-quality standard of care is to be offered to these young people, and if they are to develop the resilience to succeed in what is now-and will continue to be for several years, as noble Lords have said-a challenging employment market. For many young people, the best placement is in a high-quality children's home. We need a strategy for this sector to prevent further drifting downwards. I look forward to the Minister's reply; he may wish to write to me.

Baroness Turner of Camden: My Lords, I thank my noble friend for introducing this debate and for the manner in which he did so. We are all aware of the statistics. We know that more than a million young people are unemployed, in many cases without the hope of getting any kind of job. Moreover, they are surrounded by a culture in which far too much emphasis is placed on money and possessions.
	It is now nearly 12 months since the riots-the 5 Days in August, to quote the title of the excellent interim report published in the aftermath of the riots. The panel conducting the investigation did not cite one particular cause, but the riots involved mainly very young people. Mainly male, they mostly came from relatively deprived areas and felt excluded. That is no excuse for the violence and arson that happened. However, if a generation of young people feels that it is not part of society, the social consequences for the rest of society are likely to be dire. Indeed, the panel felt that it was possible that there would be further riots in the future.
	The Government have made certain cuts in public provision, which has not helped. It was wrong to dispense with the EMA, the allowance introduced by the previous Government, which was designed to assist young people taking on further education and training. Some of the rioters claimed that they had nothing to do; clearly, it is not a good idea to economise in youth provision.
	However, the big problem is the lack of employment. Here, as many of us have said, the decline of the manufacturing base in this country has resulted in a lack of employment even for skilled people. This is now generally recognised. My own union, Unite, has long campaigned for more support for manufacturing. It believes that a diverse and thriving manufacturing sector is necessary and that the economy should never again have to rely on the service sector to generate employment and growth. It clearly has not done so. In this context, the provision of adequate training is very important. I am pleased to see that there has been a revival of interest in apprenticeship training.
	In a recent document, Unite said that ensuring that there are sufficient workplace skills is a matter of shared responsibility between the Government, employers, trade unions and individuals. It believes that the Government must take action to ensure that employers train their workers. The only way to ensure that this happens is through the introduction of a statutory training levy. It quotes the example of the vocational education and training system in Germany, which offers qualifications in a broad spectrum of professions and skills, and can flexibly adapt to the changing needs of the labour market. Trade unions are involved and co-operate fully in the system, which is widely respected throughout Germany.
	I have referred previously in debates in this House to the role that unions can play. The TUC has a department concerned with training and operates its own department called unionlearn. It also supports courses of further education for members at Ruskin College. I believe that the Government should provide the right conditions for employers to take on apprentices and must provide funding and support, particularly as regards SMEs. That is far more important than interfering with and removing employment protection, which has been suggested in some quarters. These are just some thoughts about youth unemployment, which we all find very troubling.
	Ultimately, of course, it depends on the economy. There are many critics of the Government's present direction, although it is to be hoped that there are some indications that that direction may change. Austerity as a policy is not providing the improvements sought. As a result there is much dissatisfaction among ordinary working people, with rising costs, stagnant wages and a general feeling of insecurity. This is unlikely to produce jobs for young people. A young person with a job, and perhaps a hope of advancement, has a stake in society and is unlikely to riot. But to deal with these problems we need a policy for growth, which is increasingly recognised. In the mean time, some of the measures supported by the unions, including my own, particularly the union policy documents that they have produced, are certainly worthy of consideration.

Baroness Prosser: My Lords, I, too, thank my noble friend Lord Adonis for initiating this debate. As everyone has said, he introduced it in a very interesting and exciting way. Very many young people are waiting to hear what can be done to help them get a good start to their adult lives. There have of course been a whole range of attempts by various Governments to deal with the problem of youth unemployment. This problem has been with us through good economic times and bad. I agree of course that ameliorating steps must be taken to try to use all possible levers to make sure that young people become connected to the world of work.
	Many others have spoken about the various schemes currently in place and I do not want to comment too much on that aspect of the problem. I want instead to address the two overarching issues which in my view have given rise to this problem, and which have also already been touched on. First, I shall turn to the vastly changed structure of the labour market, which has gone from a manufacturing, all-hands needed economy to a service-based landscape with high skills and high rewards for the relative few at the top to the lower skilled and certainly lower paid many at the bottom. Consequent to this change comes my second point; namely, the failure of subsequent Governments to recognise that this change calls for a major overhaul to the provision of education and training.
	I am obviously pleased by the increase in the number of young people moving into further education and the increase in university numbers. I am also the first person to say that an all-round education is a good thing. I agree that access to quality literature and poetry is part of the stuff of life-although, perhaps I may say, not necessarily learning poetry by rote. I welcome the proposal that primary school children should learn a foreign language. I believe that discipline, good manners and timely attendance are essential steps towards becoming a good citizen. But I also think that education has to be provided within the context of "What is it for? Where will it lead?". How does this stage in a young person's life help them when they move to the next stage? Why is academic education valued so much more highly than vocational training and skills?
	Recent research by City and Guilds, which looked at the views of 3,000 young people aged between seven and 18, showed that the link between education and employment is central to tackling youth unemployment. Some 69% of those young people thought that maths was very important to helping them get on in life. However, the 14 to 18 year-olds said that they found maths boring and irrelevant. More than half of the 16 to 18 year-olds said, unprompted, that taught maths should be geared towards real life and set in relevant or practical scenarios. In this country, we are in dire need of employees trained in technical and scientific subjects, the basis of which is a good appreciation of maths. Here half of our young people are turned off the subject before they have even reached the age of taking their GCSEs.
	In the same research, it was found that of the 64% of 14 to 18 year-olds who had received careers guidance from their teacher only 14% had found it useful. They found the most useful source of guidance was visiting an employer. However, of the 16 to 18 year-old cohort only about a quarter had had the opportunity of a workplace visit. Why is there not an organised programme of workplace visits? Work experience can be a very good thing but taster visits well before a youngster has made exam or subject choices can help to clarify what is expected and needed, not only in terms of knowledge and study but in terms of behaviour and how to dress et cetera. I am sure that many schools do good work linking up with the local business community but far too many do not. Taking away the careers advice function from schools will only make this matter worse.
	In 2010, I was asked by the Recruitment & Employment Confederation to chair a task force into the issues around youth unemployment. We produced a report with a number of findings, many of which were directed towards the relationship between education providers and employers. Subsequently, more than 100 employers have signed the REC charter, which commits them inter alia to develop links with local schools and colleges, to promote apprenticeships and to participate in specific initiatives developed by, for example, the Prince's Trust or Business in the Community.
	While these ideas are aimed at employers, this does not let the Government off the hook. Reducing financial support for students is hardly the right message to be sending at a time when there is a skills shortage in the labour market, which is currently being filled by better trained and better educated workers from overseas. Intensive support is required to train our young people for all levels of employment. Vocational courses have for too long been the poor relation but we also need investment in research and high-level technical skills. Fiddling about with a short-term patchwork of schemes and programmes is hardly likely to put us on a footing with our competitors, never mind help us out of this recession.
	It is not even cost effective. Research by ACEVO shows that in 2012 the £4.8 billion cost of youth unemployment to the Exchequer is higher than the budget for further education for 16 to 19 year-olds. Add to that the cost to society generally of a generation of disaffected young people and this is not a good picture. On one final point, I find it strange that this debate has been designated as falling within the purview of only the DWP rather than the Department for Education or the Department for Business, Innovation and Skills. It is within those departments that the answers to this problem will be found. I hope that the debate will be brought to the attention of the relevant Ministers.

Lord Collins of Highbury: My Lords, I thank my noble friend Lord Adonis for initiating this debate. The only thing I am slightly surprised at is that we occasionally meet in the local greasy spoon and I am getting bigger and he is getting thinner. I do not know what I am doing wrong.
	To be unemployed is horrific, whatever age you are. Clearly, we cannot separate the rise in youth unemployment today from the country's overall economic performance. However, as my noble friend Lord Wood said, research studies have shown that youth unemployment has risen more steeply than all-age unemployment in this and recent recessions. That has not always been true. Up to 1970, unemployment rates for people under 20 were below those of all ages. According to Paul Bivand, in his piece for the TUC circulated by the Library on the youth labour market, Britain's structural youth unemployment is rooted in the recessions of the 1980s and 1990s. The recoveries from those recessions never saw the return to the norm of young people leaving school at 16 and immediately going into a job or getting a job. Even when the economy was booming, approximately 7% to 9% of all young people were headed for long-term worklessness from the age of 16.
	The costs of long-term youth unemployment, now and in the future, are enormous. As my noble friend Lady Prosser said, according to the ACEVO Commission report, chaired by David Miliband, the cost to the Exchequer in 2012 of youth unemployment will be £4.8 billion, which is more than the budget for further education for 16 to 19 year-olds and will cost the economy £10.7 billion in lost output.
	What are the long-term costs to the individuals who start adult life as unemployed or in a job with little scope for development? Unfortunately, the experiences of young people who are in work are not always seen as a policy concern. While many people will progress from lower paid jobs into better work, some are at high risk of cycling between unemployment and low-paid work. Of those young people who have left education, 17% are in elementary work, while 13% are in sales and customer service occupations. Without support to progress into better jobs and build their qualifications, these young people face uncertain labour market futures. There are also very high rates of under-employment among employed young people who are not in education, with 9% of those who are not in education and are working part time doing so because they cannot find full-time employment.
	Things will change only when society, government, families and employers alike see that the transition from school to work can and should be a positive pathway to developing skills and life-long learning. Through the debate, I have heard many noble Lords refer to the importance of ongoing training. I am very sad at the demise of the industrial training boards, which ensured that all employers took responsibility. As many other noble Lords have said, the path from school to university is well known and supported, but 50% of our young people do not head in that direction. In my family in the 1970s, three out of the four children went into long-term apprenticeships and training. Now the job destination has little in terms of opportunities, is too often ad hoc and low quality, and sometimes chaotic and wasteful of public money.
	Schools need to improve their relationship with the world of work. That does not mean right at the last moment; it means that on an ongoing basis relationships with local employers are incredibly important. On the subject of term-time employment, from the age of 15 I took a Saturday job working in the Swan and Edgar department store in Piccadilly. It taught me a lot of lessons, including the importance of being on time, because my pay of 19 shillings and 6 pence would be docked if I was not. I agree with the noble Lord, Lord Roberts, and my noble friend Lady Prosser that what we need is to bring all aspects of government together in bearing on this issue. It cannot just be a matter of benefits. What steps will the Minister take to ensure that there is joined-up action by the Government?
	Labour supports any step to help unemployed people back to work, but the measures in place and those recently announced provide no real guarantee of a job. Today, after nine months of unemployment, a young person will be referred to the Work Programme, where a young person can go for two years and fall out of the back of it with still no job, having been unemployed for 33 months. It was reckless to scrap the future jobs fund in May 2010 and, with the youth contract announcement, provide no help to young people until April this year. In effect we have had two years of inaction from the Government on this important issue. The 160,000 youth contract work subsidy placements over three years means just over 53,000 funded jobs every year, fewer than the future jobs fund, which provided 105,000 starts between October 2009 and March 2011. There is no guarantee that these jobs will be created, as it is merely an incentive rather than a guarantee. I repeat the question asked by many noble friends and noble Lords. How does the Minister think, in reviewing the scheme, that its scope and number can be advanced?
	A central ambition of Ed Miliband and the next Labour Government will be to conquer long-term youth unemployment. As my noble friend Lord Adonis has already said, a policy towards meeting that objective was announced in March this year, which is a real jobs guarantee for young unemployed people out of work for more than a year. The scheme will ensure that after 12 months of unemployment, all young people aged between 18 and 24 will go on a six-month long paid job, preferably in the private sector. This would apply to at least 110,000 people. For that the Government will pay the wages directly to cover 25 hours of work per week at the minimum wage. In return-and again this is the responsibility issue-the employer would be expected to cover the training and development of the young person for a minimum of 10 hours per week.
	The Government have a responsibility to provide opportunities for young people, employers have a responsibility to train them, and young people have a responsibility to make the most of those chances. I endorse what many noble Lords have said, including my noble friend Lady Sherlock. We need to give real hope and real opportunities to young people. Here I share the views of the right reverend Prelate the Bishop of Chester, who was right to stress the need to nurture young people, because it is a moral issue as well. It is in our interests as the older generation to do that for future generations.
	In Spain I saw someone wearing a T-shirt on behalf of the Indignados. The T-shirt said: "Future of Youth-No job, no home, no pension, no fear!".

Lord Freud: My Lords, I thank the noble Lord, Lord Adonis, for the tone he set in introducing the debate, which noble Lords have followed. This has been a very thoughtful debate. The noble Baroness, Lady Sherlock, got it right when she said that we are all against youth unemployment but the question is how we solve it.
	Before I get on to some of the meatier stuff, I ought to deal with the moral dimension introduced by my erstwhile fellow student, the right reverend Prelate the Bishop of Chester. I reassure him and my noble friend Lord Roberts that there is good evidence to show that there is a positive correlation between having both more older people and more younger people in the workforce. The person who has done the best research in that area comes from the Benches opposite in the shape of the noble Lord, Lord Layard, who is not present but has done excellent research on this matter.
	Clearly, the recession has had a major impact on the participation and unemployment rates of young people. As other noble Lords have pointed out, the relevant figures, having been broadly stable since about 1998, started to go up again in a very disturbing way from about 2004. I remind noble Lords of the underlying figures. In 1997, the number of youngsters who were unemployed or inactive was 1.14 million. By the time that this Government came in, the figure stood at 1.39 million and it has gone up a little since; it is now 1.42 million. Therefore, we are looking at something that stems from much more than a recession; we are looking at a structural factor in our economy and the failures of our education system to keep up with the changing economy and ensure successful transitions for all young people, as so many noble Lords have pointed out.
	The noble Lord, Lord McFall, asked whether there should be a statutory target for youth employment. We do not think that that is the right answer. The noble Lord, Lord Giddens, asked where the jobs are coming from. The Government seek to turn round the economy to get those jobs provided by the private sector. Indeed, private sector employment overall has gone up by 45,000 in the quarter, a quarter of a million in the year and by 634,000 since the election.
	The figure for youth unemployment is over the emotive 1 million mark. However, a lot of them-30%-are full-time students who are looking predominantly for part-time work. Rises in unemployment have been driven by longer-term factors. People who bear the brunt of those changes in the labour market are those who are trying to get into the market; that is a natural factor. However, joined to that is significant demographic change with a larger number of young people entering the labour market than was the case 10 years ago.
	The noble Lord, Lord Adonis, talked about the Wolf report. Like him, I read that report with some astonishment and was shocked by its finding that at least 350,000 16 to 19 year-olds were getting little or no benefit from post-16 education. That report has been adopted in its entirety by the Government and we are trying to make the wholesale changes in the vocational education system that it recommends.
	We also have lower productivity than many other nations, which is partly explained by the lack of skills in the working population. Increasing participation is designed to make a significant contribution to economic growth. However, it is easy to get too gloomy. A large number of youngsters succeed in education and make a successful transition into the world of work. The number of young people not in full-time education and unemployed is around 10% of all 16 to 24 year-olds, which is lower than after previous recessions. The noble Lord, Lord Adonis, talked about the long-term unemployed in this age group. One of the things that was distorting the figures was the fact that as youngsters moved into the long-term category, they were taken off on to training courses and were not classified in that way.
	When you look through the figures at the underlying position, you will see that there has been an increase in the number of long-term unemployed since the election, but it has not doubled. Today, it stands at 167,000. If you calculated it on the same basis, it would be some 153,000 at the time of the election. Therefore, there has been an increase, which is not satisfactory in any way, but it is not a substantial, horrific figure. If you look at the total number and not just the long-term figure, there are signs that there has been a small decrease-again, this is not good enough-in the number of young people on jobseeker's allowance and other forms of temporary support.
	The right reverend Prelate the Bishop of Chester asked about the EU and the other moral question of the movement of labour. We are looking at this issue. Interestingly, over the past year, in contrast to before then, the employment rate of UK nationals has held up better in this market than that for non-UK nationals, which has fallen.
	The noble Lord, Lord Giddens, and the noble Baroness, Lady Prosser, asked whether we should increase the number of young people in higher education. We have not changed the principles that date from 1963: namely, everyone who can benefit from higher education should be able to get it.
	Clearly, too many young people are not in education, employment or training. However, most young people spend only a short time in that NEET category. The ones to worry about are those who spend a long time in it. As I think the noble Lord, Lord Wood, said, the longer-term impact of spending too long out of the workforce affects many factors. I endorse all that he said about the economic effect. That clearly concerns us as a Government, just as it concerns him.
	The programme of education reforms, including increasing the freedom of schools, will help to raise attainment for all pupils by the age of 16. This year, we are increasing our investment to a record £7.5 billion to fund education and training places for 16 to 17 year-olds. Regarding the question of my noble friend Lord Roberts on careers guidance, through the Youth Contract we are putting in place extra adviser support for 18 to 24 year-olds, including referrals to careers interviews delivered by the National Careers Service.
	We are also implementing a £180 million scheme to target financial support to young people who need it. This will provide guaranteed bursaries of £1,200 a year to help young people to overcome barriers to participation. Our approach to supporting unemployed young people into work is based on an individual's need for short-term or more intensive, long-term support. For those who are closer to the labour market, the focus is on engaging young people in real work with employers and keeping them active in looking for a job. The options are work experience, skills, advice on apprenticeships and support with job search. My noble friend Lord German asked about working with the CIPD. We are working closely with it, particularly on finding employers who can offer work experience. Jobcentre Plus is working in every part of the country, placing thousands of young people in work experience.
	Regarding the youngsters who need more support, the noble Lord, Lord Adonis, had a little bit of fun over how we are trying to make sure that the resources go towards the people who really need it by getting them into the Work Programme early. The aim is to get these people in at the three-month stage and the rest at nine months. As the noble Lord will be perfectly well aware, one way that we achieve efficiency through the Work Programme is by concentrating on payment by results. Clearly we will be able to improve the programme as it develops by refining the payments as we isolate those who are harder to help.
	Last April we launched the new £1 billion Youth Contract, which has been discussed. Regrettably, the cost of intermediate labour market interventions is very high for what they achieve, and we think that there are other ways of going about this. In answer to my noble friend Lord German, who asked whether the Youth Contract is enough, I can say that it has a very good take-up rate.
	We are pushing out a lot of apprenticeships, with 256,000 having started in the first six months of the academic year 2011-12. In answer to a question put by the noble Lord, Lord Adonis, of those 256,000, 79,000 were for 16 to 18 year-olds, although I am afraid I do not have the data for 16 to 21 year-olds. We have introduced grants to encourage, particularly, smaller employers to take on youngsters in the 16 to 24 year-old age group.
	Again in answer to the noble Lord, Lord Adonis, we have placements for work experience and apprenticeships in the DWP and across government. We have already put 49,000 people through work experience, and about half of them are now off benefits after taking part in the scheme. The success rate is virtually identical to that of the future jobs fund, but the difference is that the work experience scheme has cost £325 per placement, whereas the future jobs fund was running at around £6,000 a place.
	Clearly, young people have borne the brunt of long-term structural and demographic changes in our economy and our society and also of failures in our education system. Noble Lords pointed out that other countries were rather more successful. Youth unemployment is too high and it has long-term negative consequences for individuals and for wider society. We are working across government to minimise the long and short-term impacts of young people being NEET and to ensure that they get the opportunities and support that they need.
	We are determined to increase the participation of 16 to 24 year-olds in education, training and work to make a lasting difference to individual lives, improve social mobility and stimulate growth. We are interested not in quick fixes but in lasting change and we are changing the structures to help people on that basis. The change is aimed at helping young people to succeed in their careers and to make a much needed positive contribution to our future economic success.

Lord Adonis: My Lords, I have had my say. I just want to thank all noble Lords who participated in this important debate and to say that I hope it serves as a call to action in tackling what we all agree is one of the most urgent social crises of our time.
	Motion agreed.

Schools: Well-being and Personal and Social Needs
	 — 
	Motion to Take Note

Moved By Baroness Jones of Whitchurch
	That this House takes note of the contribution of schools to the well-being and personal and social needs of children and young people.

Baroness Jones of Whitchurch: My Lords, I am very pleased to have the opportunity today to introduce this important debate, and I do so in the knowledge that there are a number of noble Lords on all sides of the House with very impressive records of campaigning on these issues. A number of them are here today and I look forward to learning from their contributions in due course.
	I also approach this debate with a sense of sadness, because I genuinely feel that the Government opposite have lost their way on this agenda. Their concentration on education structures and exam results has overshadowed the wider contribution that schools make to producing well rounded, confident and thoughtful young people. As a result, the post-war consensus about the wider purpose of education is unravelling.
	The White Paper that preceded the Education Act 1944 stated:
	"The government's purpose is to ensure for children a happier childhood and a better start in life and to provide means for all of developing the various talents with which they are endowed".
	Over the decades, through many iterations, these same principles have underpinned the provision of education in this country. However, if we judge the current Government by what they do rather than by what they say, the wider social, personal and health issues of children are no longer a priority. I would go so far as to say that, rather than our education policy being determined by the ideology of one man, there needs to be a national debate about the purpose of education to allow parents, teachers and young people themselves to raise their concerns and to seek to develop a 21st century consensus about the role of education.
	While I would be the first to acknowledge that the previous Government did not get everything right, I am proud of our educational achievements. There was a sustained period of improvement in education outcomes in the UK from 1997 to 2010. At the same time, we recognised that pupils' low achievement was only partly determined by their education. Factors such as levels of poverty, parental support, a stable home life and a lack of community aspiration all played their part. That is why we developed the Every Child Matters strategy. This sought to integrate children's services so that every child had the right to be happy, safe, achieve economic well-being, enjoy life and make a positive contribution. This vision achieved impressive outcomes in tackling poverty, providing early intervention for Sure Start, improving nutrition and exercise in schools, providing programmes to tackle bullying and low self-esteem and providing improved sex education, to give just a few examples.
	We took the view then, as now, that you cannot expect schools to do everything. To be successful there needs to be a comprehensive approach to children with schools and communities working together. Unfortunately this is not a philosophy that is shared by the current Government. As a result, many of the successful initiatives have now been undermined. In his speeches and his policy initiatives, Michael Gove has made it clear that the No.1 and only purpose of schools is to drive up performance in exam results. In fact he has gone as far as to admit that he can be criticised for having too strong a focus on testing. His view is that asking schools to play their part in addressing the wider social problems of their pupils gets in the way of rigorous educational achievement. As a result, policies that were proven to be working and have a positive effect on the well-being and learning capacity of young people have been dismantled, or become optional extras to be implemented when money and time allows. The starkest example of this is the Government's decision to remove the ring-fenced funding for Sure Start centres, which has resulted in hundreds up and down the country being closed or merged.
	However, the changes to the curriculum and school environment are equally far reaching. Let me give an example. Yesterday I tabled an Oral Question on nutritional standards in school food. Following the turkey twizzler scandal and Jamie Oliver's excellent exposé of the poor quality of school food, the School Food Trust was set up to prepare nutritional standards that would underpin provision in all schools. The outcome was a great success. School food was transformed. There was increasing evidence that it was improving concentration and behaviour, and uptake increased. This Government, in their wisdom, decided that academies and free schools would not be obliged to adopt the nutritional standards. Now, not surprisingly, there is evidence that these schools are selling chocolates, crisps and snacks rather than healthy food; so all the health benefits of eating quality food will be undermined as more and more schools opt to become academies.
	What about another example? The previous Government sought to tackle the growing rise of obesity and lack of exercise by setting up a comprehensive network of school sports partnerships, with a requirement for young people to have two, rising to five hours of exercise a week. All the reports were that the partnerships were a great success, and that a generation of young people were now being given the opportunity to have regular exercise. The first thing this Government did was cut the funding for the sports partnerships, and although some funding has now been returned after a national outcry the current provision is a shadow of its former self, with many posts lost and many of the initiatives gone.
	We believe that schools have an important role to play in tackling poor physical health and in supporting those with behavioural difficulties or mental health problems in school. We believe that by addressing these issues we will improve the capacity of children to study and learn. It is not either/or; the two things must go together. Similarly, there is a growing weight of evidence that many young children start school without the basic skills to learn. Poor parenting means that they do not have the vocabulary to take part in lessons and they do not know how to dress themselves or to hold a pencil. Schools have no choice but to deal with these issues before they can progress with the formal stages of learning. Assuming, for example, that every child is sufficiently school-ready that they can start to learn a poem by heart at age five just adds to the list of impossible demands with which teachers struggle daily.
	Incidentally, do I detect something of a schism between David Cameron and his Education Ministers? The Prime Minister has been very vocal in identifying that children's well-being is a key priority. It is a commitment shared by the World Health Organisation and the United Nations Children's Fund. Since we are languishing somewhere near the bottom of UNICEF's list of 21 developed countries with regard to children's well-being, he seems to be on the right track. Yet Ofsted is no longer required to measure it, and both Michael Gove and Nick Gibb have described it as peripheral or a distraction from the core purpose of academic education, rather than recognising it as a foundation on which to build achievement. I look forward to hearing from the Minister whether he shares the views of his colleagues in the department or whether he agrees with the Prime Minister that schools should play an important role in contributing to children's well-being.
	I also want to say something about the fate of the specific PSHE courses which my noble friend Lady Massey has championed for so long. There are key elements of PSHE which it is vital for young people to learn about and discuss to prepare themselves for adult life. Learning about issues such as relationships, self-esteem, how to counteract bullying, personal health and finance, parenting skills and sex education should not be optional add-ons to the curriculum; they are essential life skills. I know that these have also been pursued by the noble Baroness, Lady Walmsley, on the Lib Dem Benches, which is why we were so disappointed that she felt unable to support my noble friend Lady Massey's amendment to make PSHE compulsory during the passage of the Academies Bill.
	Since that time, my noble friend Lady Massey and the Minister have had a well rehearsed stand-off on the lack of progress in the review of PSHE education. I have to say to the noble Lord that this is not good enough. Most parents expect and want these sensitive issues to be covered in a systematic way within the school curriculum, so perhaps he will be able to give us some good news on this score if nothing else when he responds to the debate today.
	We all want young people to achieve their maximum academic potential, and in the future a Labour Government will create an office of educational achievement that will provide a genuinely independent clearing house for research to learn from international comparisons and share best practice among teachers. We also believe that there are wider and softer social skills which young people should learn in school that do not have to be measured by exam results. It is a view shared in a recent Work Foundation report, which identified that the number of young people not in employment, education or training continues to rise with 954,000, or one in six now falling into this category. Its report identifies a lack of soft skills such as communication or customer service being increasingly quoted as a reason why these young people are unable to find work. These views are also echoed by employers who despair that young people are so ill prepared for the world of work. John Cridland, the CBI director-general, has criticised the Government's obsession with GCSE grades, arguing that it encourages short-term cramming and frustrates teachers because it stops them delivering an inspirational classroom experience.
	We share the view that good teaching by enthusiastic, motivated teachers lies at the heart of effective learning. In the end it is the teachers not the lessons that people remember most about their schooldays. That is why it is important to value the workforce in a way that is often overlooked by this Government and to empower it to be more creative in the way lessons are taught. Creativity should be at the centre of school life for teachers and young people, but increasingly schools are failing to nurture the creative talents of young people and we are losing global market share in the crucial creative industry sector as a result. As Steve Jobs of Apple said so eloquently:
	"The Macintosh turned out so well because the people working on it were musicians, artists, poets and historians who also happened to be excellent computer scientists".
	Not all creativity can be measured by exams and not every child wants to sit an exam in a creative subject that they enjoy. There has to be space within the school timetable for children to pursue wider interests such as music, drama and art. However, the reality is that these subjects are being squeezed from the curriculum. We believe that our approach to joined-up children's services, including schools, was the right approach in the past and our childcare commission, bringing together shadow Cabinet members from across the departments, will explore how we can learn from the past and provide even more effective integrated children's services for the future.
	In this context, we will continue to make the case for a wider role for education in contributing to the well-being, personal and social needs of young people, and for nurturing their creativity, confidence and life skills. We believe that this is what parents, children and employers want, and it is what educationists tell us is the bedrock of effective learning. If Michael Gove would join us in a national debate about the purpose of education, perhaps in time we would persuade him, too.
	In the mean time, I am pleased to have had the opportunity to share our concerns and to give the Minister the opportunity to distance himself from the hard line of some of his departmental colleagues and to endorse our perspective of the importance of a wider well-being, social and personal role for schools. I beg to move.

Baroness Walmsley: My Lords, I thank the noble Baroness, Lady Jones of Whitchurch, for introducing this very important debate and for her interesting speech. This Government's objectives for children are very similar to those of her Government, but there is more than one way to skin a cat and we are skinning it in a slightly different way. I also point out that "Mary Had a Little Lamb"is a poem that most three and four year-olds I know can recite perfectly well.
	It is a well documented fact that a child who is stressed, ill, emotionally disturbed, hungry or who does not have good general well-being will not be a good learner and is very unlikely to fulfil his or her educational potential. It is also accepted that those who do not fulfil that potential are less likely to lead happy and fulfilled adult lives, and certainly will not contribute as much to the general economy as they might have done. Therefore, I am sure that no one will disagree that we need to focus carefully on how well-being can be achieved.
	Parents, of course, are the prime players in ensuring their child's health and happiness, but schools play a pivotal role, especially where parents do not carry out their role as well as possible, for whatever reason. However, we must not expect too much of schools; I agree with the noble Baroness, Lady Jones, on that. No school, however caring and professional, can take the place of a loving, caring parent. I congratulate the Government on the measures they are taking to offer support to parents and to extend and improve the quality and flexibility of free nursery education offered to very young children. I welcome the fact that they have brought forward to this September the offer of free nursery education to disadvantaged two year-olds in some areas.
	As we all know, children are born with their brains incompletely developed. Some experts have called babies "the external foetus" because of the great amount of development that happens outside the mother's body in the first three years of life. Good-quality nursery education contributes enormously to a child's emotional, social, physical and intellectual development. Therefore, when talking about the contribution of schools, we must not forget what has gone before.
	The primary purpose of schools is the education of their pupils, but we should educate our children for a life, not just for a job. Schools help to develop citizens, husbands, wives, friends and parents-not just employees, employers or academics. Indeed, employees, employers and academics are all those other things, too. Therefore, I look to schools to get the balance right between fostering the health and well-being of children and developing their intellects. In the search for high academic standards, there is a danger of focusing too much on the child's intellectual and skills development at the expense of their well-being and emotional maturity. That is a self-defeating strategy.
	I heard an interesting interview on Radio 4 the other day with a spokeswoman from the CBI. She criticised schools for not turning out young people who were prepared for today's workplace. She did not complain about the number of GCSEs or vocational qualifications they had. She asked for life skills. She said that business and industry needs young people who have self-confidence, emotional maturity, the ability to work in a team, to negotiate and to compromise, and who are punctual and conscientious, have creativity and flexibility of thought, et cetera. That was not the first time I had heard such a plea from business leaders-it is fairly common. So where are we going wrong?
	Noble Lords will know how keen I am on statutory personal, social, health and economic education. My enthusiasm for it is undiminished. I have talked to the noble Baroness, Lady Massey, about why I could not support her amendment, and I think that she understands. I say to the noble Baroness, Lady Jones, that such barbs are self-defeating. We have a duty to deliver this information, and the opportunity to develop skills in these areas, to every child. This should be done by high-quality specialists who are trained to do the job. Only then will we avoid the current postcode lottery in the quality of provision, and raise the standard overall. I have never felt that we should prescribe how schools should do this, preferring to leave it to their professional judgment. Every child should be entitled to have it delivered to a high standard.
	There is much good practice. Some schools have PSHE elements as fundamental parts of their ethos and of everything that happens in them. Some have specialised teachers, and work with qualified people from outside the school to deliver elements of their programme. Others use some of the plethora of good-quality materials available to general class teachers. Many ensure that every lesson, throughout the curriculum, fosters these qualities and abilities in their pupils, not just special PSHE lessons. Some schools have adopted UNICEF's wonderful Rights Respecting Schools programme, which fosters democracy and mutual respect in schools, both of which contribute to well-being. Children who have a meaningful input into decisions that affect them are usually happy.
	It is important that the Government should make it clear that they expect schools to do this and that they will measure success not just on the number of A to C grades at GCSE but on the way in which schools foster well-being. Therefore, Ofsted plays a pivotal role. Schools and teachers are only human and will deliver the things on which they are measured. Parents expect schools to be happy places for their children to be, especially in the primary years. However, somehow the expectation often disappears in later years unless parents understand the link between well-being and academic success. Many of them do, of course.
	I ask my noble friend the Minister whether schools will be allowed to use their pupil premium to provide the rich experiences that all children need to develop into self-confident young adults, as long as they can demonstrate a link between the use of this money and better performance by the most deprived children. Sometimes it is extra-curricular activities that have the most effect on these qualities. Outdoor pursuits, sport, music and the other arts, and heritage experiences and activities can all contribute. It would be a pity if, when a school is monitored on its use of the pupil premium, the range of activities for which extra money could be paid were too narrow. We rightly leave the decisions to the head and teachers, but they need guidance on the scope of the activities that would be acceptable to achieve the outcomes that we want.
	Finally, I will say a word about the Government's announcement today of a consultation on how we measure and address child poverty, because it is relevant to the debate. There is a clear link between deprivation and poor attainment at school, which must be addressed effectively. Ironically, as general incomes fall, the number of children in relative poverty will decrease, even though not one child's life will have been improved. The Government do not want to be judged on such an anomaly. We want to do better and we will, despite the financial problems that we face. I hope that all parties will engage constructively with the consultation in the interests of the children we want to help, and I hope that my noble friend the Minister will confirm that the Government will welcome such engagement from all who have something useful to say.

Lord Wills: My Lords, I congratulate my noble friend Lady Jones on giving your Lordships the opportunity to discuss some of the fundamental challenges facing our education system. I hope there will be general agreement on the proposition that schools can make an invaluable contribution to the well-being and personal and social needs of young people. I hope that there will also be general agreement that, as my noble friend said, the introduction by the previous Government of personal, social, health and economic education was a valuable addition to the curriculum. Therefore, the outcome of the Government's review, when it finally emerges, will be important. Judging from what the Schools Minister, Mr Nick Gibb MP, said last year when announcing the review-that children "can benefit enormously from PSHE education"-it seems that the Government may at least pay lip service to its importance and its value. However, in considering how to proceed, I hope that the Government will make resources available to schools so that they can deliver whatever will be asked of them.
	The national curriculum, for all its well rehearsed merits, has over time proved an irresistible temptation for Ministers to pursue their pet interests without always thinking through all the consequences for schools. The present Ministers seem to be no exception. I make the exception of my noble friend Lady Morris, who will be speaking later in the debate, who was an outstanding Schools Minister and an outstanding Secretary of State.
	There are always compelling arguments for changing what is taught and how it is taught. Temptation is ever present for Ministers. Schools are now being told, for example, that they need to do better with basic numeracy and literacy; that they need to give young people a richer account of our national story; that they need to encourage greater take-up of foreign languages; that they need to stimulate more interest in maths and science; that they need to pay more attention to inculcating the soft skills that are increasingly important for employers; and that they must not overlook the importance of the humanities in producing well-rounded citizens.
	Schools are being asked to deliver all this in the face of profound societal change which makes the task of teaching complex and demanding in a way that it was not a generation ago. Young people are exposed from an early age to an unprecedented amount of information and influences from a wide range of authorities. All this amplifies peer pressure in an unprecedented way.
	This clearly creates new and demanding challenges for teachers. For example, the quickest way to secure a dramatic improvement in GCSE results would be to get boys to do as well as girls. However, there is a stubborn and intractable gender gap, with girls outperforming boys across the curriculum. This applies, to varying extents, across almost every social class, region and ethnic group. The precise reasons for this are unclear, but what is clear is that a significant cause must lie in societal change, which teachers are having to address on top of all the frequent and extensive changes that politicians demand of them.
	Tackling these challenges might not be the problem it is for so many schools if sufficient resources of time and teachers were available, but they are not. Education, like everywhere in the public sector, is enduring tightening budgets which are not going to ease at any time soon.
	Apart from budgetary pressures, there is the problem of trying to meet all these demands within an institutional framework which has changed too slowly to meet the new demands on it. The exam system, for example, is still based on the flawed premise that young people all mature, emotionally and intellectually, at the same rate, and so they are all due, more or less, to take exams at the same time. A system which allowed and encouraged young people to take exams as soon as they were ready to do so would create valuable flexibility which could help meet some of the challenges faced by schools.
	Again, for all the waves of reforms launched by Minister after Minister to the curriculum, to the exam system and to school structures, far too little attention has been paid to methods of teaching. Schools still rely too much on the teacher acting as a sage on the stage even though new technologies and learning programmes could enable more flexible approaches, tailored more to the needs of individual students, with teachers acting more as a guide by the side. This is not to replace whole class teaching but to enrich it.
	A longer school year would create more space for all the subjects that merit inclusion in the curriculum. It would allow more intensive teaching of core subjects; create the space to tackle the difficult transition between key stage 2 and key stage 3, where many pupils regress; and many parents would welcome shorter holidays. If we want improvement in educational outcomes, I can see no good reason against lengthening the school year, apart from resourcing it. Has the Minister's department done any research into the returns from such an investment?
	The Minister may well argue that the new freedoms the Government are giving to schools will enable them to meet these challenges-and so they may-but they can never be a complete solution. Our education system is one of the most important forces that bind us together as a nation. If the Government abdicate from their responsibilities to ensure an appropriate curriculum, an effective pedagogy with agreed outcomes and, crucially, adequate resources to deliver all this, the result will inevitably be uneven provision of varying quality-and those who are likely to suffer most from this uneven provision, whatever the pupil premium will deliver, are the most disadvantaged, those young people who have most need of a good education to get a better start in life. Such an abdication of responsibility by government can never be acceptable.
	Schools can make an invaluable contribution to the well-being and personal and social needs of young people, but only if government enables them to do so. I hope the Minister can reassure us today that this Government will not walk away from their responsibilities to do so.

The Lord Bishop of Chester: My Lords, you would expect me to make a contribution to this welcome debate from the perspective of church schools. However, those who are expecting a learned discourse on sex education from these Benches will be disappointed. Some of my fellow bishops are much better qualified to speak on such matters.
	While the church school movement has always given a proper emphasis to the three Rs, and is valued as such by parents and educational authorities, church schools have always aimed for a wider development of character in young people-the well-rounded and thoughtful young people to whom the noble Baroness, Lady Jones, referred in her excellent opening speech. It is the notion of character as a virtue that encompasses the well-being, personal and social needs of which the Motion speaks.
	Church schools would also wish to include a reference to the spiritual and moral development of young people as being an intrinsic aspect of being human. To be a human being is unavoidably to be a moral agent, for good or for ill. We see the spiritual and moral education of children as more than merely religious education as such, although it has a part in it. A proper excellence in religious education is of course one of the aims of church schools, but in the broader spiritual agenda. This is also implied in the Motion.
	Perhaps I may say a word about a subject which has been much discussed in recent years but which has not been referred to yet in the debate-that is, the role of schools in promoting community cohesion. Since 2007, it has been a statutory requirement on maintained schools to promote community cohesion. There has been some criticism of church schools that they may work in the other direction by concentrating upon a particular section of society or by approaching education from a particular direction and point of view.
	Fortunately, we have been able to commission an independent report into the issue which looked at the comparative outcomes of different types of schools in promoting community cohesion. This has been possible because Ofsted is now required to report explicitly upon this. We commissioned a report from Professor David Jesson of the University of York, using Ofsted data. The report was published a couple of years ago now and is entitled Strong schools for strong communities. It demonstrated that at primary level there is little difference in the outcomes of different types of schools, although church schools are as good as or better than other primary schools. However, at the vital secondary level, interestingly, the report showed that faith schools had a noticeably better outcome in the Ofsted report conclusions in promoting community cohesion. The report states that,
	"there are relatively few Community or Foundation schools that are graded anywhere near those of Faith schools",
	in promoting community cohesion.
	Ofsted also reviews the performance of schools in the promotion of equality of opportunity and the elimination of discrimination. Professor Jesson, in the report, also reviewed those outcomes in relation to different types of schools. The report states:
	"Here again the contrast between Faith schools and Community schools is clear. Faith schools achieve higher gradings on this aspect of their contribution to their pupils and their community",
	than other types of schools. I hope that those who, for understandable reasons on the surface, are drawn to potential criticism of faith schools will pay attention to these hard research findings in this area.
	Why is this the case? It is because schools are most effective when they avoid a sausage-factory mentality, when they are clear about their own distinctive values and the position from which they approach the task of education. That does not exclude others, but typically nurtures a shared sense of belonging to the wider community. When we know where we come from, we can more easily reach out and engage with other groups and sections in society, be that locally, nationally or, equally important, internationally and globally.
	Let me offer a final quotation from the report:
	"Promoting community cohesion is not about diluting what we believe in in order to create a pallid mush of 'niceness'. Nor is it about trying to make all schools reflect exactly the economic or cultural make-up of the nation".
	There has been a temptation in recent decades to adopt a sausage-factory mentality in relation to maintained education, so there is a lot of promise in contemporary developments.
	I have spoken rather generally about "church" or "faith" schools, and I believe that it is right to do so, but an interesting development over recent years has been the emergence of all sorts of partnerships and a greater variety in the sector itself. I welcome the range of schools now sponsored or supported by different faith communities and different combinations. In my own diocese we now have joint Anglican and Roman Catholic primary and secondary schools, whereas when I became bishop, we had none at all. Often the churches themselves are now in partnership with other institutions. My diocese is in partnership with the University of Chester in sponsoring an academy that will replace two failing secondary schools in a particularly difficult area. There is also potentially to be a new free school based at Chester cathedral with a music specialism. So the term "faith" school now embraces a wider variety of partnerships and activities, which is thoroughly welcome.
	We also should not overlook the contribution of the independent sector. A lot of independent schools have either a faith foundation or to one degree or another a faith character. The work of chaplains in independent schools is often overlooked, but typically they are regarded as significant people in the school community because they help the community to look beyond the narrow academic focus. The thread that holds all this together is a commitment to the common good. Faith schools may have different outlooks-Roman Catholic schools tend to put a slightly closer focus on nurturing Roman Catholics, which is understandable-but, as I say, the thread is a commitment to the common good. That is what really counts. The common good lies, as we have already discovered in this debate, beyond a narrow academic focus.
	Some noble Lords will have read in the press or heard on the radio discussions about Martin Amis's new novel, which apparently is an exploration of the triviality of much of modern society. We live in a world that has a tendency to be too dumbed down, and that can easily affect our education. Alongside academic excellence, you need the soft skills we have heard about, the emotional intelligence that used to be nurtured primarily in families. With the decline of family life for various reasons, more pressure is put on schools, so it is important that in the future schools should look at the soft elements, including emotional intelligence in education.

Lord Layard: My Lords, if parents are asked what they want a school to do for their children, they almost always say two things: first they say, "I want my child to learn", and then they say, "I want my child to be happy". The question is this: are those in conflict? The scientific evidence is absolutely clear: they are not in conflict. In order to learn you need to be happy, with peace of mind and inner calm. Einstein once said that to make scientific discoveries, you need to be happy, and the same is true of children. Here is a recent analysis of a sample of American eighth graders who were tested at the beginning of the year on their IQ and their resilience. At the end of the year they were given their academic grades and, as a predictor of those grades, resilience was twice as important as IQ. You have to have the character as well as the brain.
	Fortunately we now have a great deal more evidence about how to produce resilient, happy young people who do not engage in risky or anti-social behaviours. There have been hundreds of randomised controlled trials of highly structured programmes covering social and emotional learning, sex and relationships education and healthy living. I shall set out a meta-analysis of the effects of those programmes, each of which took about 18 hours of the child's time. The effect on the emotional well-being of children was something like 11 percentile points up-from 50 to 61. The effect on behaviour was an extra 11 percentile points, and the effect on academic achievement was an extra 11 percentile points. These programmes are working on every dimension. So let us abandon the idea of a conflict between the objectives and ask schools to do exactly what parents want them to do. What a surprising suggestion.
	What this would mean is complicated, so I want to make just three points. First, I turn to the whole school approach. Obviously, the whole school has to commit itself to making the happiness of its children one of its prime objectives. This should be a decision that is made after a great deal of debate involving teachers, parents and governors. I belong to a movement called Action for Happiness, which is preparing a code for schools that might wish to take a step of this kind. One would hope that every school will make the happiness of its children one of its prime objectives. That means going beyond what all schools are now expected to do-anti-bullying, anti-racism, anti-drugs-by trying to build up positive attitudes and adopting a positive lifestyle that children can enjoy, including replacing the desire to pass exams with the love of learning.
	Secondly, I turn to explicit training in life skills, which is a particular part of the curriculum that is otherwise known as PSHE. Of course, this can be done very badly or very well. Undoubtedly, there are inspired teachers who can think it through for themselves, but these are very difficult subjects to teach. They can hardly just be given to someone who has a gap in their timetable. It is easy to teach these subjects in a way that makes no difference. We should not live in a Pollyanna world where we think that all this is easy and can be carried out successfully. It needs a great deal of thought and application. For example, the evaluation of the secondary SEAL programme, the only part of the programme that has been scientifically evaluated, shows that it makes no difference to anything. That is an important finding. The reason given-I must say that I foresaw this-was that the programme was not sufficiently structured to ensure that ordinary teachers could be guaranteed to achieve a result. We need to rely on much more structured, manualised programmes that have been scientifically evaluated to show that they make a difference. Perhaps I may declare an interest. I belong to a group that is aiming to put together a set of programmes from the hundreds I mentioned earlier in my remarks which could constitute the complete PSHE secondary school curriculum. If that was shown to work, we would be able to develop PSHE as a proper subject in schools and as a specialism within the PGCE.
	I shall go back for a moment to the fundamental aim of all these programmes, which is to give children control over their minds. The idea is that we can all gain more control over our minds and our thoughts, which is particularly important because changing our thoughts can change our feelings and our behaviour.
	This brings me to my last point, which is about mental health. This should obviously be a part of the basic training programme for every teacher and schools should become much better at identifying mental health problems among their children. In fact, the Good Childhood Inquiry that I was involved with suggested piloting a questionnaire tool to be used at periodic intervals over a child's life, which would have the effect not only of helping to identify children who were in trouble-and many emotionally disturbed children do not show it; they are not always behaviourally disturbed-but of motivating schools to take the outcome of well-being much more seriously because they were actually measuring it.
	Of course, once a child has been identified as having a mental health problem, there must be facilities available to treat them. I was appalled to read this morning that half of all mental health services are experiencing budget cuts at the moment, in many cases of 25% or more. This is an outrage. This is obviously such a big area of unmet need already in our country. We also know that mental illness among children has increased since the 1970s. A nationally representative survey has been conducted four times, supported by a local survey in the west of Scotland. Both these surveys found that there is twice as much emotional and behavioural difficulty among 15 year-olds as there was in the 1970s. The reasons given in subsequent questioning are, not surprisingly, more anxiety about looks, possessions and, of course, exams.
	This brings us back to the question of whether we can shift our schools from exam factories to schools for life. I think we really have to do that and I really hope that the Minister can persuade his Secretary of State to open his powerful mind to that issue.

Baroness Miller of Chilthorne Domer: My Lords, I declare an interest as a board member of UNICEF UK. I am very pleased that the noble Baroness, Lady Massey of Darwen, is going to speak this afternoon-as I would expect that she would, with her expertise-because I hope that she is going to talk about all her work with UNICEF on the Rights Respecting Schools Awards and the positive effect of that programme, of which she has been such a tremendous champion. I actually want to talk about food.
	I congratulate the noble Baroness, Lady Jones of Whitchurch, on introducing this debate, and on her Question yesterday, which gave me some useful pointers on what I wanted to concentrate on today. The noble Baroness was a little bit down on some of the achievements of this Government. For example, I would point to my honourable friend Sarah Teather's tremendous achievement in ensuring that the UN Convention on the Rights of the Child is really embedded and understood not only in her department but across government.
	I want to concentrate on food because the quality and amount of food and how it is eaten has the most fundamental effect on children's well-being. It is obvious: if you are hungry, you are just not able to learn. As a result of sugar-intense foods and drinks-not just sugar as we understand it from cane or beet but also the epidemic of corn syrup that has been pumped in to every sort of food, whether it is pizza, sausages or baked beans-children are becoming obese at an earlier and earlier age.
	As also came out in the Question yesterday, in the comment made by the noble Lord, Lord Ramsbotham-he was referring to young offenders but it applies to children too-young people are unable to control their behaviour and mood if they have eaten foods particularly high in sugar, caffeine or some additives that are implicated in bad behaviour. The point that a change of diet produces dramatic results in children's ability to learn and concentrate is very important.
	In Answer to the Question tabled by the noble Baroness, Lady Jones, the Minister referred to,
	"inculcating extremely good habits of eating".-[Official Report, 13/6/12; col. 1336.]
	That is the key because it is at the primary age that we have a responsibility to make sure that those habits that set children up well for life are achieved. We are fighting quite a battle now because we are paying a very heavy price for the loss of school kitchens and traditional cooked lunches that swept across the UK in the 1980s. Many of today's parents never really formed those healthy eating habits and now we are expecting schools to be at the forefront of trying to change diet, eating habits and attitudes to food.
	However, there are some bright spots. We do not want to change habits back to the 20th century-that was not such a golden moment either-but to adapt them to 21st century possibilities. On the plus side, I point to the great rise of ethnic foods such as lentils, curries and couscous. I am sure that your Lordships can remember when garlic was an exotic food and there was a pretty boring range of vegetables. We have come a long way from that time and there is now a world of spices and herbs that can make carbohydrates such as a bowl of rice much more interesting and appealing.
	It would not be right to talk about school food without mentioning all the organisations that are making a tremendous difference: the School Food Trust, School Food Matters, the Children's Food Campaign, the Local Authority Caterers Association and Garden Organic. Earlier today I attended the launch of Going Hungry? Young People's Experiences of Free School Meals, a piece of research by the Child Poverty Action Group and the British Youth Council. It reinforced what I had already heard, that out of 7.5 million schoolchildren there are 2.2 million living in poverty, of whom 1.5 million are eligible for free school means but only 1 million actually receive them. Half a million children are missing out and that really is a disgrace. I also strongly support the Children's Society Fair and Square campaign.
	There are lots of reasons why free school meal take-up is not what it should be. One of these is stigma, and take-up has been proved to be much improved where schools operate a cashless system that anonymises pupils who are on free school meals. A really decent aspiration for any Government would be that when the nation can afford it, all primary age children-at least-receive a free school lunch. It should be as much a part of education as teachers, playgrounds and learning materials. It is very strange that food became the optional extra in the education system.
	However, in the mean time I hope the Minister can assure me that the Government's priority is to increase free school meal take-up among the eligible and ensure that all the schoolchildren whose families are in receipt of universal credit, when it comes in, will be eligible for free school meals. Can he assure me that the introduction of universal credit will not mean that fewer children will qualify for free school meals?
	The Food for Life Partnership has been working for some time on the issue of nutrition. According to its research, twice as many primary schools received an Ofsted rating of outstanding following their participation in the Food for Life Partnership's work. School nutritional standards are highly important, as is Let's Get Cooking, which runs the country's largest network of cooking clubs. If you want to enthuse pupils and parents, cooking clubs are a great way to do it.

Baroness King of Bow: I thank the noble Baroness for giving way and commend her on an excellent speech. Is she aware that a third of academies have described school nutritional standards as a burden? Does she agree that the real burden is the heart disease, diabetes and cancer and other diseases that will afflict our children? Does she think that the Government could increase the urgency with which those nutritional standards are introduced for all schools, including academies?

Baroness Miller of Chilthorne Domer: Yes, I think that children in all forms of education should expect the same standards to be applied to them when it comes to what is deemed to be healthy food.
	I commend the work being done to encourage children to grow their own food. Making the connection between where food comes from and the effort that goes into producing it has other effects such as making sure that less is wasted.

Baroness Morris of Yardley: My Lords, I am glad to be able to contribute to this debate and congratulate my noble friend Lady Jones on bringing it to the Chamber. I do not think that anybody is going to speak against improving the well-being of children or meeting their personal and social needs. I shall wait to the end of the debate to see whether any noble Lord does-perhaps the Minister will. However, it is an area of contention, where there is genuine debate and some uneasiness about how we are progressing. The crucial thing is not to persuade the world, those in the educational system or politicians that those things are an important part of education; it is to try to understand why we do not do it very well and to overcome those barriers.
	However, the world has moved on and we now have a better understanding of the consequences of not getting this right, which in some way increases our support for it. I shall refer to three areas, two of them being pretty obvious and the third being the point made by the noble Lord, Lord Layard. First, there is a body of knowledge about sex education, drugs education, physical education and physical well-being that needs to be given to young people. That comes under this area of learning. There is a set of skills and attitudes- resilience, teamwork, self-esteem and confidence-which children and young people need to develop if they are to do well in the world. We have come to accept during the past few years that schools have a role to play in that, because for some children all those things are developed at home. Some children would get all that knowledge and all those skills without going to school, but the truth is that many do not and everyone could contribute to good-quality education in that field. I accept the point made by the right reverend Prelate the Bishop of Chester that, years ago, the church called it "character"; it was the same debate.
	As my noble friend Lord Layard pointed out, we have become stuck because we have seen these things as competing forces-it has been an either/or. We have wanted either education for qualifications or a rounded education. We have pitted one against the other with terrible consequences when we come to evaluate our performance. What is new is the body of evidence and research that shows those approaches not as an either/or but as interdependent. If we can get social and emotional literacy right, children will improve their academic skills as well. More than that, we are now developing a pedagogy and ways of working in school that are beginning to lead to progress in how we teach SEL effectively in the way that we have been trying to make progress in how to teach literacy and numeracy effectively in years past. The pedagogy in this area is therefore slowly catching up. The more it catches up, the more powerful is the case for making it an integral part of what we would do.
	I agree with my noble friend Lord Layard about the research coming out of America-Joseph Durlak and Roger Weissberg have done some excellent randomised control studies. I disagree with them slightly on the social, emotional, and academic learning programme. With the primary SEAL programme, the evidence about the effects of that sort of learning on academic attainment and well-being is far better.
	This is a very important time. We have a choice: either build on these changes which are taking root and try to take what we can from them in delivering a good quality of education; or ignore those seeds that are shooting through. That is the crux of this debate. The Government of whom I was a member could be criticised for being top-heavy and too instructive, but we tried to put in place a structure on which these things could develop. Whether it was the PSHE programme, compulsory citizenship, SEAL, the sports partnerships, the creative partnerships or training teachers, it was a structure which allowed those things to flourish.
	My great worry is this: I am seeing that structure decline and fall away. I do not think that this area of pedagogy and effective teaching is sufficiently strong to withstand that. The danger comes from two things that the Government are doing. First, if they hold true to their pledge to let teachers decide about curriculum and teaching methods, the risk is that this area of school activity is not well enough rooted to withstand that. Too many schools, often those which lack confidence or are in areas where children are disadvantaged and behind in basic skills, feel that they do not have time for these things. The second risk is that-even if the Government do not keep to their pledge, as seems likely, to leave it to schools to develop curriculum and pedagogy-the messages that they are giving are not about this area of teaching. I do not have much a problem with poetry; I do not have much of a problem with literacy or numeracy; but I look at the utterances of Ministers and cannot find the speeches. I cannot see the press releases; I cannot read the leaked documents in the Sunday Telegraph and the Daily Mail that talk about this area of the curriculum. Quite simply, schools and teachers get the message inadvertently-because I do not believe that the Government take this view-that it is not valued.
	We are at a vital time where it is for the Government to help us make the decision on whether we build on this growing body of knowledge, understanding what we did not know 10 or 15 years ago, and put some support in there for us to do better, or we go backwards and turn our back on the progress that has been made.
	I look for three things from the Minister: first, an acknowledgement of what the research is telling us and how the Government might build on it; secondly, a clear signal, which the Government may give in any way they wish, that this area of teaching is valued and that schools are expected to do it, with the impact that it can have right across the academic curriculum as well as in its own right being explained to them; and thirdly-and this is where I am most likely to disagree with the Minister-the Government should provide some sort of infrastructure. If they do not like the structure that we had, that is fine, but they need something, because all the evidence and all the experience of past years tells us that, when the going gets tough, this gets left out. It deserves better than that.

Baroness Massey of Darwen: My Lords, it is always a great pleasure to follow my noble friend Lady Morris. I found myself nodding at almost every sentence she spoke.
	I am delighted that my noble friend Lady Jones has given us the opportunity to debate these important issues today. I shall cover and echo some of the concerns of other speakers and, as the noble Baroness, Lady Miller, anticipated, I shall refer briefly to Rights Respecting Schools as a trustee of UNICEF.
	Research and observation by teachers has long shown that if a child lacks emotional and social strength and does not have protective factors with which to encourage good physical and emotional health, and to resist negative influences, then he or she will perform less well at school.
	The Joseph Rowntree Foundation report of 2010 pointed out that young people were more likely to do well at GCSE if they had belief in their ability, could examine their own behaviour and actions, avoided risky behaviour and did not experience bullying. Pupil well-being enhances academic achievement. As the right reverend Prelate said, it is not just about being nice; it is something a bit firmer-my noble friend Lord Layard echoed that.
	As many have said, parents and families are vital in providing the foundations for well-being. Sadly, some families do not do that. Some children enter our schools deprived-materially, socially and academically-and schools have a hard job to make up that deficit. To their credit, many do. Families cannot provide all that is necessary to foster social skills. Being in a school sports team, singing together, playing in a music or drama group or creating a small business help social skills and self-esteem. Highly academic schools, such as Eton or Rugby, recognise that there is more to being successful than learning by rote. The deputy head of Rugby School said:
	"As a parent, you don't buy into a school like Rugby just for the academic education. You also want your child to develop skills for life. Personal social and health education is an important part of how the school measures that".
	I am very disappointed that the Government appear to have decided that personal, social and health education, PSHE, will not be mandatory in schools. It is not the only thing that develops well-being, as I shall discuss in a moment, but if the Government gave PSHE status, that would send a message that this area needs focus and organisation and is important for all children. PSHE would provide informed decisions about resisting pressure and working in groups. From that core, PSHE could radiate other aspects of well-being in school-for example on school policies such as bullying or school meals and the work of school councils and assemblies-in subjects across the curriculum and in programmes such as UNICEF's Rights Respecting Schools.
	I give an example. Bullying could be a focus of discussion in PSHE; it could be discussed by the school council; it could form part of an assembly; and it could be taken up in English or drama with a story about bullying or writing and role play about bullying. It is not just a body of knowledge, it is about the process of education and decision-making. Schools deliver education for well-being and personal and social needs in many ways. This delivery, like any school subject, should develop from simple concepts to more complex ones as the child matures. One-offs on diet, alcohol, relationships, safety and so on are not enough. They need to be reinforced year-on-year. That is why organisation is so important.
	Many schools see the sense of that and are involved in the Personal, Social, Health and Economic Education Association's charter programme, which draws on effective practice of PSHE as described in Ofsted reports and evidence from schools. A key to the success of programmes to foster well-being and personal, social and health education is their organisation in schools. Good organisation depends on school leadership taking it seriously and recognising that well-being is informed by self-evaluation and must be included in the school action plan. No child should be left to experience random, disorganised or non-existent education in personal and social development.
	A positive ethos in school is, of course, also important: an ethos where bad behaviour is difficult and strategies implemented; where kindness and respect between everyone in the school is considered important; and where boundaries for conduct are clear and explicit. It is all very well to say that a school should have regard to well-being. It is another matter to make it a focus in the school.
	That is why I believe that there should be a core subject of PSHE in schools and that it should not be isolated. I would be unhappy if a school had a programme that simply ticked off topics such as diet, safety, sexual relationships, drugs and alcohol. That should back up what is already going on in school, plug gaps and reinforce the development approach to learning for every child.
	I go back to organisation and structure. Schools which take educational well-being seriously often have a senior member of staff to co-ordinate its aspects across the school: in the taught curriculum, in policies, in activities such as the school council and in out-of-school activities. Such a person can and does work with staff to deliver structured programmes. A school in Cheshire, the Sir William Stanier Community School, has created champions in each area that PSHE covers. That has motivated staff. Some schools have their own teacher training programmes. Some have a PSHE room where the school ethos and positive messages of that behaviour are reinforced. The Frederick Gough School in Scunthorpe has adopted a PSHE Association school charter and says that PSHE is regularly rated by parents and pupils as the most valued non-academic subject.
	The Rights Respecting Schools evaluation said that school leavers were unable to identify specific investments that they had made in the Rights Respecting Schools programme because it is embedded in the school rather than separated from their other work. So it should be for the school's contribution to personal and social well-being and development. It should be embedded in the whole school. All children can benefit from such an input from school. In particular, those children who do not have the advantage of caring and respectful homes may be encouraged to see life differently. It is an issue of equality as well as education.
	I do not think that the Government understand what personal, social and health education is about. The Minister may; I know that the noble Baroness, Lady Walmsley, does; but it is not about skinning cats it is about nurturing cats. The Government are placing too much emphasis on topics and factual information and not enough on whole school processes which foster the well-being of children. I think that they are nervous about sex education, not recognising that this is about relationships and well understood by most faith groups. I do not understand why there is such a delay in producing a curriculum review including PSHE. We have examples from research, good practice, inspection and teachers of what helps pupils achieve in schools. Children need a firm basis of confidence, self-esteem and support, all inherent in a school's contribution to well-being. I look forward to the Minister's response to some of the issues raised today.

Baroness Benjamin: My Lords, I thank the noble Baroness, Lady Jones, for securing this important debate because, according to the saying, school days are the best days of your life. But I have always thought that it should be changed to, school days are the most important days of your life, because the school experience can either make or break you. Childhood lasts a lifetime and the early foundation stages are the most important of a child's life. That is when the billions of brain cells are forming connections, so good nursery and primary school teaching is essential to the foundation of a child's development. That is the time when they need the best teachers. A nursery or primary school teacher is just as important as a university lecturer; they do the same core job.
	Teaching and learning should not be a box-ticking exercise for either teacher or pupil. We should be helping children to develop their problem-solving skills, to digest and analyse information, to be creative and original and to use their imagination through exposure to music, singing, dance, art, drama and poetry, as well as sports and exercise. Self-discipline is also important, but that comes with the confidence children gain from these types of experiences in the place they spend most of their time-school.
	I loved my school days. Starting back in Trinidad, where I was born, we sang the national anthem at the beginning of each school day. It gave me a sense of national pride, which has served me well. Seeing young children waving their union jacks with pride during the Queen's Diamond Jubilee, it occurred to me that perhaps we should start each school day with the singing of our national anthem so that they have a sense of national pride embedded in their psyche-because the feeling of being proud of who you are is the best confidence booster, which in turn helps with learning.
	I have spent a great deal of my life visiting schools around the country and over the past two decades I have witnessed many changes, mostly for the good. One of the most significant changes I have seen is the way in which schools and those who teach in them have adapted to the diverse society that Britain has become. Something which has developed from this is the way in which schools are nurturing the concept of a more tolerant and considerate society. I have for many years believed that we should, in addition to the core curriculum subjects, allow children from a very early age to delve into the psychology of life and encourage them to explore, discuss and develop fundamental life skills and interpersonal and social skills. Some schools are already doing so. I know a head in a deprived area of north London who invites students in years 5 and 6 to sit around a table in her study to have lunch with her and discuss current affairs-and to hear their views on issues that affect their lives. This helps to develop the children's social and intellectual skills and build their confidence.
	When I am invited to speak in schools, I often use the story of "The Three Little Pigs" to demonstrate simple philosophy. I am sure that noble Lords here are familiar with the story, so I will not tell it today, but when I tell it to young children I show them through the story that to build your life on solid foundation you need to work hard, to do a good job, to think ahead and analyse the situation-and never to give up. It all helps them to cope with life's big bad wolf. The reaction I get is amazing. Children as young as five really get it and it shows how much teachers need external support from parents, as well as from visiting writers, artists and musicians.
	That is why PSHE needs a place at the heart of the curriculum. Delivered creatively, it empowers children to have the moral courage to stand up for what is right; to learn to resist temptation; to say no to bullying, gang culture or drugs and alcohol; to have empathy for others, and to get a better understanding about morality, integrity and honesty. All this should be the foundation of every school's philosophy, giving children the ability to make good long-term decisions in their relationships and lifestyles, which in turn they will pass on to their children. It is an indirect way of giving them the parenting skills that they might need one day. Schools need to be encouraged to make space in their timetables to offer these opportunities or to integrate them into their lessons-and to feel free and able to do so, not to be inhibited or feel pressured to do otherwise.
	These may seem simple concepts but so many children have never had the opportunity to think in a philosophical way, to discuss moral issues or to project their imagination into the future and envisage what their lives may be like if they take a particular course of action. This is why we should seriously consider the teaching of life skills and encourage young children to explore basic philosophy.
	Good teachers are so important in all this to help with the well-being and happiness of children, making them want to attend school. We as a society must demand this but we must also hold teachers in the highest regard. Parents and children must be aware that teachers deliver the special gift of education, which can change lives. The fantastic teachers I meet when I visit schools are aware of their responsibilities to every child in their care and that they must treat each one like a delicate piece of porcelain. However, we must continue to strengthen and develop the training of teachers and to continue to raise awareness, in all schools, of children who are in danger of slipping through the net for a variety of reasons. Holistic teacher training is most important, now more than ever.
	Many children in our schools come from dysfunctional households, never having any family bonding or attachment, but play therapy can help emotionally damaged or abused children, as in the work done by the British Association of Play Therapists. I declare an interest as patron. However, many schools engage people who have taken a three or four-day part-time course in play work, believing that they are employing a play therapist, at a much lower salary than they would if employing a fully qualified play therapist. A fully qualified play therapist requires a post-graduate two-year course in play therapy plus one year for the MA. To safeguard vulnerable children and to make sure nothing is missed from the child's play, therapy must and should be carried out by people who are highly trained and skilled in this work. I ask my noble friend to consider setting up a national register of play therapists and not just leave it up to local authorities or schools to engage play therapists who may not have the fully registered and necessary qualifications.
	We are here to pay tribute to the tremendous work done in schools and to praise and encourage those who work there. No system is perfect, but as long as we all continue to work together to improve and adapt to the changes in society, we can ensure that our children are in good hands at school.

Lord Pendry: My Lords, I too begin by congratulating the noble Baroness, Lady Jones of Whitchurch, on introducing this timely debate. In October 2010, the Secretary of State for Education made a statement informing the Youth Sport Trust and others that the previous Government's policy on physical education and sports strategy was to be abandoned and that the ring-fencing of that strategy was to end by March 2011. The excuse was that he wished to encourage more competitive sport in schools by removing many of the requirements of the previous strategy.
	We know from those who, unlike the Secretary of State, are genuine lovers of sport and know about its benefits just how unpopular and illogical his approach was, so much so that, following pressure from teachers, parents, sportspeople and others, including Members of this House and the other place, he was forced to make a mini-U-turn in December 2010 when his department announced that every secondary school would receive funding up to the end of 2013 for one day a week of PE teachers' time to be spent outside the classroom. Although this was welcome, his approach in October 2010 should never have been undertaken. It was evident that he was completely out of touch with the good work that has been carried out under the previous strategy of collaborative planning across schools, which was highly praised by Ofsted for improving the capacity of individual schools, quality sport provision and strengthening the pathways from school into community sports clubs.
	Clearly one of those most affected by the Minister's stance was, and still to some extent is, the Youth Sport Trust, which has done so much under the leadership of the noble Baroness, Lady Campbell of Loughborough, to ensure access to high-quality PE in schools and to provide for young people to be active and healthy. As it has pointed out to me, sport helps ensure that young people make healthy choices as they move into adulthood and provides a framework for aiding their mental development, improving their self-confidence and self-image and enhancing their attainment across the curriculum. It seems inconceivable to me and, I am sure, to other noble Lords that this Government and this particular Minister do not recognise the correlation between the provision of sport and combating many of the problems that face our society today.
	In the time I have available, I wish to dwell on a sporting activity which is very relevant to this debate. However, it is not a sport that I excel in. Just two weeks ago, I met Kate Prince, the choreographer and founder of the ZooNation Dance Company and ZooNation Academy of Dance. She has done an extraordinary amount of work to engage young people in physical activity. The ZooNation Academy of Dance works with children as young as four years old to help them get engaged and inspired about dance, music and fitness. The academy, situated in Islington, brings together young people from many backgrounds and works with them to teach fitness, discipline, confidence and teamwork through street dance. Young people today have wide-ranging interests that we need to recognise if we want keep them engaged and motivated in sport and education. Kate's experience shows that street dance is a very popular form of dance for many young people and a favourite way to keep fit.
	It is a great shame that we are not using the wonderful vehicle of dance to engage more young people in sport while they are at school. A recent survey by the Women's Sport and Fitness Foundation showed that only 12% of girls and 25% of boys aged 14 are doing as much physical activity as they should be in schools. Many of these young people said that the lack of options available in school sports turned them off doing physical activity, and many, girls in particular, would have preferred to have had less competitive PE options like dance.
	I am increasingly concerned that no real consideration is being given to the availability of wider sport and fitness activities in schools, including dance. Kate's experience and national statistics prove it. If we are to get children interested in sport at a young age, schools should give them more opportunity with a wider choice of activities and a more flexible approach. As Kate Prince told me, our duty is to educate children in the round-their entire body, not just their brain. Alongside academic subjects, that is essential. Activities like dance that are creative and physically demanding help children express themselves, feel part of the team and valued by their peers. Children of the ZooNation Academy get the chance to channel their energies towards a positive and exciting goal, rather than spending it on the streets causing trouble.
	Today we must not forget that school sports should be built on more and more, and supported by appropriate extracurricular activities being available for our young people. The Education Select Committee looked at services for young people last year, and reported that 85% of young people's waking hours are spent outside formal education, yet each year local authorities spend 55 times more on formal education than they do on providing services for young people outside the school day. With cuts affecting sports and youth clubs around the country, there is a real worry that young people will be deprived of active and fun things to do, both inside and outside their school.
	I hope that the Minister will have learnt something from what has been said in today's debate. I hope that he will be able to give us some encouraging news that the Government have learnt something over the past few years, following the misguided approach of the current Secretary of State for Education.

Baroness Warnock: My Lords, in July 2011 the Office for National Statistics published a paper called Measuring Children and Young People's Well-being, which showed that the belief that they were doing well at school was a crucial factor in the sense that children from the age of eight upwards have of the quality of their own lives. Given the many hours that children spend at school, as we well know, that is not in the least surprising.
	I am sure that your Lordships will agree that a good school is a happy school. More than that, if, at the crucial age of 14, we could adapt the school curriculum more to the wants and ambitions of the children than we do at present, in the manner advocated by the noble Lord, Lord Baker, who is no longer in his place, we would find that far more children than do at present had the peculiar satisfaction of believing that they could succeed and the feeling that they were doing something that was worth doing. Nothing could be more central to personal and social well-being than that kind of sense of the worthwhileness of what you are doing. The Minister should give even more attention, and I am sure that he is, to the plans for changing schools and changing the direction of the curriculum at the age of 14.
	I agree entirely with, among other people, the noble Baroness, Lady Benjamin, that the early stages of school are crucial. I ask the Minister whether the Government could not, even now, rethink the connections between the needs that children have at this age. I know that we have been promised an end to the concept of the statement of educational need by 2013. I know that the multiple assessments and long delays to which children are now subjected are to be replaced by a single assessment that will culminate in an education, health and care plan.
	That holds some promise. But, in my view, it also points to something further, and I would be grateful if the Minister could tell me what he thinks of this. As long ago as 2006, the House of Commons Select Committee on education published a report that was highly critical of the present structure and framework of special educational needs and urged the then Government to start again and radically rethink the concept of special needs. More recently, in 2010, Ofsted reported on the inflated numbers of children who were classified as having special educational needs, suggesting that, for various reasons of self-interest, schools were wrongly so designating children, and sometimes masking incompetent teaching with claims of special educational needs among the pupils.
	As a way to reverse this expensive and ultimately futile and damaging trend, I suggest that the idea of special educational needs, as opposed to other needs, should be dropped altogether-at least for nursery and primary school years. Instead, we should conceive of the duty of the school as to meet the needs of the child without distinction, by whatever means are available, through the skills and the training of teachers, the vigilance of the head and the governors, and, in general, the ethos developed within the school. After all, for very young children, every experience is educational. For children who are disadvantaged and, above all, for children who come to school with a poor vocabulary and poor communication skills, the most crucial need is that they should be enabled to develop these skills and thus to learn. Of course there will emerge-and probably will already have emerged-children whose special needs include specialised teaching of one kind or another; children who are perhaps profoundly and multiply disabled, and children who genuinely prove to be dyslexic. These children will emerge and can have specialised teaching. The rest of the children do not need to be scrutinised to see whether they have special educational needs. They have special needs. They need to be taught to communicate, to play, and to take part in dancing, music and drama. All these things are highly educational, but are absolutely crucial to the development of the child, and to his or her feeling that he or she can succeed. This is where the happiness that can be generated by a school really lies: the feeling that you are doing something at which you can succeed. The main task of the first years of education must be to enable children both to succeed and to learn to believe that they can. This is the basis of enjoyment.
	The concept of SEN was introduced into legislation in 1981, more than 30 years ago. The inquiry that preceded the 1981 Act had been expressly forbidden to take any account of social deprivation in its consideration of what were then known as "handicapped children". This is now practically unbelievable but it was the case. Therefore, the concept of educational need seemed to be the only way of grouping children together when they required something beyond what most teachers provided. We have come an enormously long way since those days.
	It is time for us to change our attitude to the function of schools, and to put right at the front the function of making children believe that they can succeed. We should not designate them as having special educational needs unless they have some specific, sometimes very profound, difficulty that needs a different kind of education altogether-perhaps different teachers with different skills. We should change not only our attitude but our vocabulary accordingly. Therefore, I ask the Minister whether the Government will, after all, consider a fresh start in this area, which should be completely divorced from party politics.

Baroness Warwick of Undercliffe: My Lords, I thank my noble friend Lady Jones for introducing this debate. As she so eloquently reminded us, children's well-being matters not simply to ensure that they have a good childhood but because it provides a solid foundation for their future well-being as adults.
	The Good Childhood Report, published earlier this year by the Children's Society, makes the point that fortunately many children in the UK are happy with their lives. However, substantial numbers of children do not feel so positive. It says that at any given time around 4% of eight year-olds and 14% of 15 year-olds have low subjective well-being-the term used to describe people's assessment of, or happiness with, their lives as a whole. The society points out that children who report low levels of happiness are much less likely to enjoy being at home with their family, to feel safe when they are with their friends, to look forward to going to school, to like the way they look, and to feel positive about their future. The evidence shows that a low level of subjective well-being is associated with a wide range of social and personal problems. These include poor mental health through increased depression, social isolation through increased loneliness and the likelihood of victimisation, and involvement in risky behaviours such as running away from home and sexual exploitation.
	The Children's Society report is part of a growing body of evidence about children's well-being that is based on responses from children themselves. This was given greater impetus here in the UK by UNICEF's 2007 report, which placed the UK at the bottom of a league table of child well-being in 21 industrialised nations. Although there has been some progress, the UK remains within the lower rankings compared with other OECD countries. It hardly needs saying that education is core to this. All the studies show that learning is closely intertwined with well-being. The school environment, as a context of learning, plays an important role in children's social, emotional and behavioural well-being.
	This afternoon, I will focus on the contribution of schools to young people's well-being at both the entry and exit points. Those are the nursery school years, or early years foundation stage, and the latter years of school life, as schools prepare their leavers for the next stage of their developing adult lives, including through careers advice or further academic study. I have spoken on the subject of early years education in this House before. It is very important that nursery schools are able to address each child's individual developmental and cultural needs. I welcomed the Department for Education's recently published document Supporting Families in the Foundation Years. It reminds us that the primary aim of these years is to promote a child's physical, emotional, cognitive and social development so that all children have a fair chance to succeed at school and in later life.
	Reforms to the early years foundation stage will take effect from September this year. I am glad that they pick up the recommendations made by Clare Tickell and others last year, and acknowledge the compelling evidence that high-quality early education is linked to children's healthy progress through school and into adulthood. For example, studies show that nursery schools offer a secure environment in which children with special educational needs, or with English as an additional language, can flourish. A significant number of nursery schools are also children's centres serving areas of social or economic deprivation. They therefore have a particular role to play in social inclusion.
	However, nursery schools across the country are under threat due to cutbacks in council spending. Universal services are becoming more targeted. The loss of more early years' grants will directly affect existing children's centres. Further cuts threaten nursery classes within schools as nursery schools find it increasingly difficult to be financially viable within the LEA. What assurances can the Minister give that behind the welcome words about the importance of the reformed EYFS there will be clear directives to local authorities to raise the profile of nursery schools and to promote an understanding of their role?
	A further point here is the importance of experienced, properly qualified staff. Work in early education and childcare is still widely seen as low status, low paid and low skilled. I therefore await with great interest Professor Cathy Nutbrown's report on strengthening the early years' workforce, which is due out this month. We must ensure that women and men enter the profession with the skills and experiences that they need to do the best work possible with young children and their families. What will the Minister do to encourage the promises made in the Supporting Families in the Foundation Years document to strengthen qualifications and career pathways in the foundation years? What assurances can he give us that there will indeed be continuing investment in graduate-level training in early education and childcare, and that early years education professionals will become a central part of the remit of the new Teaching Agency?
	We can all agree with the Department for Education's aim that children should start school healthy, happy, communicative, sociable, curious, active, and ready and equipped for the next phase of life and learning. The same aim should hold, of course, for when they leave school. Schools have a tremendous role to play in preparing young people in a whole range of areas as they enter the next stage of their lives. There is no doubt that advice and guidance on careers is needed. The latest statistics show that the number of 16 to 18 year-olds not in employment, education or training increased from 159,000 in the first quarter of 2011 to 183,000 in the same period this year. This means that the proportion of NEET 16 to 18 year-olds now stands at 9.8%, which is up from 8.3% from last year. Those are troubling statistics. We are in difficult economic times and the employment prospects for young people can seem bleak. It is all the more important, therefore, that schools are equipped to advise on the most appropriate next steps for each individual.
	From this September, schools will have a statutory duty to provide independent, impartial careers guidance for pupils aged 14 to 16. While I do not think that that goes far enough, with no additional funding many schools will be unable to meet even this basic requirement. The Milburn recommendation to use the previous Connexions budget to allow schools to tender for careers services has not happened. What is more, the guidance was issued with little time for schools to commission careers services to start from this autumn. Will the Minister take steps to ensure that careers advice in schools does not miss the most disadvantaged pupils? Will he also give consideration to the call in the Milburn report to prioritise initiatives, such as a national mentoring scheme?
	Schools also have an important role to play in giving accurate, up to date information on the diverse landscape of higher education. I believe passionately that a key part of a young person's social and personal development can come through the life-enhancing experience of higher education, but they must have the right advice on their choice of A-level subjects and accurate information on the changing arrangements for student funding. There is little universities can do to counteract the impact of a student having studied the "wrong" A-levels for the degree course.
	It is crucial that young people, particularly those from disadvantaged backgrounds and those with no family history of higher education, have access to first-class guidance about their options and on how to navigate the many choices offered by higher education. In conclusion, perhaps I may ask the Minister whether, if schools are to be charged with providing this, they will be given the means to do so. Without a ring-fenced budget, and without much clearer guidance to schools on what good careers guidance looks like and how to provide it, there is a real danger that the system will fail those who most need it.

Baroness Tyler of Enfield: My Lords, I, too, congratulate the noble Baroness, Lady Jones of Whitchurch, on securing this vital debate on a subject that is very close to my heart. It is in the nature of coming towards the end of a debate like this that so many things that I wanted to say have already been said, and said extremely eloquently, so I shall improvise a little and add one or two things that have not yet come up in the debate.
	There is an increasing body of evidence that good emotional well-being is strongly associated with good educational attainment and improved employment prospects. More recently, a link has been shown between well-being and increased earnings potential. Of course, the reverse is also true. Drawing on my previous experience as chief executive of the charity Relate, I know very well from the work that we did in many schools across the country that when children and young people experience problems with relationships at home in the wake of a high-conflict family breakdown, it adds great difficulties to their ability to learn at school. That is one reason why high-quality relationship education for all is so critical.
	There is so much that I would like to say, probably on another occasion, about sex and relationships education, or relationships and sex education, as I have always liked to call it, but I shall wait for another debate to discuss that in more detail.
	On the whole issue of the importance of emotional well-being, it is little surprise that, as we know from James Wetz's work and his visits to schools in the United States, the United States has explicitly devoted its efforts to turning out children with emotional well-being as well as academic achievement. We know from his work how those two have been so clearly linked, and how critical this has been for children in disadvantaged areas.
	Closer to home, there are schools in the independent sector-we have already heard about this from the noble Baroness, Lady Massey-such as Wellington College, which has been a trailblazer for the principle of well-being and emotional resilience. It has done this by involving every aspect in their school of their ethos, design and teaching across the whole curriculum. It is not just a question of having a lesson called "emotional well-being" but about it running through absolutely everything that the school does-not least, as the principal would tell us, because it has helped to boost their academic results. If that is good enough for the independent sector, should such an approach not be good enough for the state sector? I very much believe that it should.
	To try to bring in one slightly new angle to this debate, I wanted to mention the work that I have been involved in. I have been very privileged over the last year to be a member of the All-Party Parliamentary Group on Social Mobility. On 1 May we published our interim report, Seven Key Truths About Social Mobility. Truth number seven was that personal resilience and emotional well-being are quite often the missing link in the chain for social mobility. I shall try to explain what we meant there. We already know, from all the work that we did, that young people's expectations, aspirations, feelings about their own abilities and whether they have the power to control what will happen in their lives and their sense of agency affects behaviour and decisions.
	There is an emerging body of fascinating research in this field that points to the importance of young people developing the social and emotional skills that in turn give them the confidence, self-esteem, resilience, persistence and motivation to deal with the stresses, strains and set-backs of everyday life and still come through. This capability, sometimes called a character trait, is increasingly being linked in the academic literature with the ability to do well at school, move up the social ladder and take advantage of second and third chances. These social and emotional capabilities range from the softer end of the spectrum, if I can use that term-skills around empathy and the ability to make and maintain relationships-to the harder end of the spectrum, which is discipline, application, mental toughness, for which people sometimes use the term "grit", delayed gratification and self-control.
	In policy terms-and this is relevant to this debate-it is really interesting that these skills can be taught not just in early years at school but into adulthood, and that effective interventions in this area, where schools have a vital role to play, can make a real difference to educational attainment, employability and job success.
	The American Nobel prize-winning economist James Heckman has also shown that there is a good economic case with good economic returns for investing early in this area, particularly for disadvantaged children. He concludes that identifying and scaling up these sorts of interventions in school and elsewhere is fertile territory for tackling disadvantage and improving social mobility. In case this should all sound too academic, or indeed from the other side of the pond, it is interesting to observe that developing psychological or emotional resilience and mental toughness is seen as a very important life skill by many educationalists here. Indeed, as one director of children's services has put it recently:
	"Not only can we, in many cases, enhance a young person's performance, these particular skills are useful for just about everything that a person is going to have to do in life".
	We have already heard many facts and figures on mental health and the UNICEF report. We also heard some interesting things about the Office for National Statistic's recent report, Measuring Children's and Young People's Well-being, which was published in 2011, not least that it assessed the impact of a child's well-being on a parent's well-being, and said that,
	"a parent is only as happy as their saddest child".
	We have also heard about The Good ChildhoodReport published by the Children's Society, which emphasised the value of asking children how they feel about their lives to help to understand the key ingredients of a good childhood. Many factors came out of that and we have heard about many of them in this debate, so I will not repeat them. However, what I think was most relevant to this debate was the consultation with children, which found that they saw school as vital to their well-being, both at present and in the future.
	What does all this add up to and what can schools do in this regard? I understand the argument that there is only so much that a school can do. At the very least it is absolutely vital that schools ensure that their staff understand signs of emotional and behavioural problems, and that there is someone in each school responsible for knowing what support is available from local services, be they in the statutory or voluntary sectors. It might be things such as increasing access to psychological therapy-I very much welcome its recent extension to children and young people-and ensuring that children can get linked in as quickly as possible. It is interesting to note that in both Wales and Northern Ireland but not in England there is a requirement for counselling services to be available in all secondary schools.
	There is much that schools can do with universal approaches and targeted services. The experience in the USA and in private schools is particularly important. I very much look forward to hearing the Minister's response on these issues.

Lord Griffiths of Burry Port: My Lords, when drawn at No. 15 out of 15, you never know what is going to be left-perhaps items from the rich man's table-but I will do my best.
	I thought dark thoughts when the noble Baroness, Lady Miller, spoke about food and took my pitch from me. However, I hope that she will think that what I have to say complements what she said so strongly and well. I pay tribute to my noble friend Lady Jones of Whitchurch for pulling this debate out of the bag, especially given her background of the School Food Trust. I hope that I am entitled to add to what has already been said.
	I was led to the subject of food because today I must be ultra organised in that I must go straight from the Chamber to a governors' meeting at the Central Foundation School, where I have served in that capacity for a very long time. The May newsletter that we shall be looking at at the governors' meeting concentrates on food, and therefore my subject was chosen for me. I was delighted to see that the newsletter states that detailed discussions between the school's catering company, Alliance in Partnership, the school council and Islington Council have led to an improvement in the nutritional value of the school's food, but that it has also smartened up the canteen so that it is a more agreeable environment within which to eat food. All of us know that when we choose a restaurant we want to go to a nice place with ambience as well as gastronomie.
	The sort of menu that you now find in the school canteen in the basement of a Victorian building looks as though it might rival the Rivington Grill or L'Abat Jour-my favourite restaurants in my area. On offer are lamb meatballs in tomato sauce, Mediterranean vegetables with couscous, beef curry, vegetable balti, mango chicken baguette or wrap; for side dishes, country mixed vegetables, pasta, braised rice or side salad; and, for dessert, a fruit bag, home-based dessert selection or rhubarb crunch with custard. The mouth waters.
	The great thing about this is that it is not simply what is on offer when you go with your tray to the cafeteria; everything is integrated in a more generic approach to food, and that runs through the whole school curriculum. We offer food technology classes throughout years 7 to 9 in which students learn how to prepare healthy meals from scratch. Food technology has proved so popular that we also offer an after-school cooking club.
	As though that were not enough, the school has tried out a student-run restaurant called The Globe. Hospitality diploma pupils were given another opportunity to wine and dine guests in their very own food establishment, this time named Central Cuisine. From luxury student-run restaurants to French food tasting, the Central Foundation offers a whole host of ways to keep students excited about healthy eating. Along with a variety of extracurricular sports activities and classes, there is something for everybody. And as though all that were not enough, who needs to write speeches when they are written so brilliantly for you in this way? Top tips-there are seven of them-on page three of the menu reads:
	"Drink plenty of water. Take iron. Eat breakfast. Include protein-rich foods. Optimise Omega 3s. Boost energy. Destress with salad".
	It is all absolutely fantastic.
	Far from this being an esoteric and rather marginal thing to talk about, we should be making more of good and healthy eating as the basis for a child's sense of well-being at school so that they are well disposed to receive what happens in the classroom and have the strength to undertake what happens on the sports field afterwards. I should have said that I was talking about the Central Foundation Boys' School. Therefore, even better, all these things challenge gender stereotyping as well.
	Although she is not in her place now, I want to pick up on the intervention of my noble friend Lady King regarding whether the freed, autonomous and freestanding academies are under the same sort of pressure to give the same prominence to food in their general delivery or whether, as she suggested, up to a third have given it very low importance. I ask the Minister to give me some kind of satisfaction on that point but not to take too long on it as I have to get to the school governors' meeting presently.
	As a child in far-away Wales in a poor home where I did not eat any meat until I was 16, it was in 20th-century school canteens that I was fed all my protein through school meals. There was very tough meat. It was not called lamb then; it was called mutton and it was not very nice but, goodness me, it seems to have given me enough strength to stand up in your Lordships' House and to go on at noble Lords in this way.
	In conclusion, from that menu, for me it would be the beef curry with braised rice, and I think I will choose the rhubarb crunch with custard, although that may be slightly counterproductive.

Lord Hill of Oareford: My Lords, I am the 15th speaker and the noble Lord, Lord Griffiths of Burry Port was 14th because we had a no show, but it is always a great pleasure to speak after him. He has reminded me how long it is since lunch and how long we still have to wait until supper. I will try not to detain him or the House too long in responding to the important issues that the noble Baroness, Lady Jones of Whitchurch, has raised this afternoon.
	I am sorry to disappoint the noble Baroness, Lady Morris of Yardley, but she will not find someone to disagree with her basic contention about the importance of the contribution that schools can make to the well-being and personal social needs of children. It has been an extremely good debate this afternoon, as is always the case. The noble Lord, Lord Pendry, said that he hoped that I would listen and learn from the debate; I always try to do that in your Lordships' House. I always learn things when I come to the House and listen, whether it is about research that I had not heard of before or a range of other issues that provide food for thought along the lines referred to by the noble Lord, Lord Griffiths.
	I very much agree about the contribution that schools can make and, as has been argued this afternoon, I think that schools do that in a variety of ways. They certainly do it through sport, for example The Government agree with the noble Lord, Lord Pendry. I know that we disagree about some of the mechanisms. I know what he has contributed in the past and of his disagreement on how we are now approaching it, but it is not the case that we do not value the importance of the contribution that sport makes not just to health and in tackling obesity. Those things are important, but it contributes in terms of character and learning about oneself. I agree with the noble Lord as well on the important contribution that competitive sport makes, but there are other ways, such as dance, for example. When I go around the country I am lucky to see the variety of ways that schools try to engage pupils in different physical activity. Often the boys do the dance as well. Contributions can be made through sport, music and diet, as we have already discussed, and as mentioned by my noble friend Lady Miller of Chilthorne Domer, and of course through PHSE, as once again set out by the noble Baroness, Lady Massey. They are all crucial in helping to improve well-being and in preparing young people for the world that they will discover when they leave school.
	I agree with the point made early on by my noble friend Lady Walmsley about the importance of parenting. We cannot expect schools to pick up all the pieces. We expect a huge amount from schools and over the years they have become the repository of more and more of our concerns about social ills generally. We think, "Oh well, let's get the schools to do it". We must not expect them to pick up all the pieces but I recognise, as the noble Baroness, Lady Massey of Darwen, reminded us, the important contribution that they make and how many schools help to make up for some of the deficiencies that too many children suffer with the decline of parenting skills and family life.
	I very much take the point about the importance of soft skills that employers are looking for and the question of character, which was first raised by the right reverend Prelate the Bishop of Chester. Character and resilience are in a way much the same thing. I agree with him about the contribution that church schools make to community cohesion, and it was important that he reminded us of that. We have heard of some of the many excellent examples of outstanding teaching and pastoral care that brilliant teachers provide up and down the country, including, as the noble Baroness, Lady Tyler of Enfield, reminded us, in the independent sector.
	All that having been said, I emphasise what I believe to be the core contribution that schools can make to a child's well-being: to provide a decent education. The noble Baroness, Lady Jones of Whitchurch, said that in a way the Government sometimes seem too fixated on exam performance. In reply, I say that without literacy there is not likely to be a huge amount of well-being; without numeracy there is not likely to be a huge amount of well-being; and without decent qualifications, whether academic or vocational, there is not likely to be much well-being either. I agree that it is not an either/or situation but the reason why the Government are so concerned about tackling educational underperformance, particularly in the most disadvantaged areas, is that we see it as being central to helping improve children's life chances. That is a broad goal that will include their overall well-being.
	To state the obvious-this point has already been made-a well run and orderly school with high aspirations for all its children will not just equip them with better qualifications but will help them meet their other personal and social needs. The best schools that I visit do not just do well at exams; they care about music, drama, sport, the quality of food that they offer and how the children socialise. That point was made by my noble friend Lady Benjamin. Taking up the point of the noble Lord, Lord Layard, the schools care about the happiness and well-being of their children. I agree with the noble Baroness, Lady Morris of Yardley, that they do not see qualifications and well-being as being polar opposites.
	We know that there are schools in this country with very challenging intakes that outperform schools in much wealthier areas with much more favoured intakes. Cuckoo Hall school in Enfield and Thomas Jones primary school in North Kensington do not have an attainment gap. In both schools, exactly the same percentage of children eligible for free school meals as those from wealthier homes reach an acceptable level in English and maths-and in both cases the figure is 100%. Therefore, I do not think for a moment that there is a difference between us on the importance of the contribution that schools make to children's well-being. However, I accept that there is a difference between us in how best we can achieve that. My noble friend Lady Walmsley made the point that there are different ways of going about things.
	I will set out as quickly as I can the Government's overall approach, and some of the practical steps that we have taken. First, we have the overriding goal of reducing the amount of prescription from the centre and the number of central initiatives. This is not because we do not think that any of the policy objectives of the sort that we have discussed today are desirable but because we are trying, bit by bit, to increase the space for head teachers to exercise their professional judgment. Going back in time, Governments of all complexions have tended to shove the system first one way and then another to try to fix a problem or pursue a policy. I have a lot of sympathy with the points made in this regard by the noble Lord, Lord Wills. While one can understand the rationale behind any of the individual initiatives, the cumulative effect over time was to silt up the system, leading to governing bodies and heads struggling with paperwork and directives, and being pulled in all kinds of different directions. The old Ofsted framework was an example. Inspectors reported on a minimum of 27 areas. By contrast, we want a system that is more independent and autonomous, where heads have greater space to do what they think is right for the children in their care.
	Secondly, we have recognised the importance, on which there is broad agreement across the House, of intervening early and of making sure that those from poorer backgrounds get more help. We are extending the 15 hours a week of free early education for three and four year-olds to the most disadvantaged two year-olds. We are keen for practitioners to intervene earlier with children who face difficulties. That is why we are introducing a new progress check for two year-olds under the new early years foundation stage, which was referred to by the noble Baroness, Lady Warwick. Our longer-term ambition is to introduce a fully integrated health and early years review in 2015.
	We have introduced the pupil premium and are providing £1.25 billion for it this year. In answer to my noble friend Lady Walmsley, certainly the premium can be used to improve pupils' well-being. That is precisely the kind of use to which we would want schools to put it. They should use their judgment on how best to spend the money; that is one of the principles that we are applying. We are publishing what-works evidence for schools to give them a sense of what works successfully in some areas.
	As I said, we are working to raise standards of literacy and numeracy, which are the key skills that children need to succeed. From this summer our new check at age six will help make sure that children are making progress and will pick up those who have problems-for example, with dyslexia. We will get children learning poetry. I agree with noble Lords who think that this will enrich children's learning rather than being a return to the narrow educational approach of the workhouse.
	We are trying to slim down the national curriculum specifically to free up more time for the kind of activities that we have been discussing today. I agree with the point made by a couple of noble Lords about the importance of creativity in teaching. I would not argue that there is only one approach to pedagogy; we need creativity in teaching and I hope that one of the benefits of slimming down the national curriculum generally will be to free up more space for creativity.
	We have spoken about the importance of an orderly environment in which children can learn and are free from bullying. A bullied and frightened child cannot learn and cannot be happy. We have introduced a number of measures to help schools provide a safe and secure environment. Some came in with the Education Act which a number of us debated last year. We are taking forward trials to improve the education of pupils who are at risk of exclusion from school. We have not talked today about that group of children that we want to help. It is important to remember that for those children who end up being excluded, the conveyor belt from educational failure to exclusion to, unfortunately, prison is too direct and horrible. It is important that we should try to break some of the links. The exclusion trials we are now taking forward are based on some good work that local authorities in Cambridgeshire have been doing where, by giving schools greater responsibility for their pupils, the number of pupils in their pupil referral units fell from 700 to 150 in only a couple of years. We can learn from that.
	We are also taking action to improve the opportunities and well-being of our most vulnerable children and their families, those with special educational needs, through the Children and Families Bill, to which the noble Baroness, Lady Warnock, referred. I shall make sure that the views she expressed will be referred to my honourable friend Sarah Teather. She is in the lead in this area and her views always carry great weight. We are trying to give those children and their families more of a say and more of a choice, and to bring their health and educational needs together in a more co-ordinated way. If we can achieve that, we will have made a good contribution to the well-being of some of the most vulnerable children in the country.
	As we want an education system that responds to the needs of all children, we are also working to improve the quality of vocational education alongside our efforts to secure academic rigour. I accept that sometimes it sounds as though we are only concerned about the academic side and qualifications, but that is a consequence, in some ways, of the nature of politics and how the media operate. However, the work we are doing in that area, the work that we have done with the Wolf review, the work we are doing to expand a couple of initiatives undertaken by the previous Government- university technical colleges and studio schools, of which I am a great supporter and trying to expand as rapidly as is sensible-and the increasing number of apprenticeships are all signs of our intent to cater for children who have a broad range of talents and aptitudes. We are also working to bring the worlds of work and education closer together.
	We are also taking action outside the classroom to address some of the issues that we have touched on today. These include action on child sexual exploitation, the Bailey review, steps to speed up adoption, more support for troubled families and the introduction of the National Citizen Service, which will build up to 90,000 places a year, as a way of giving young people a chance to contribute more broadly to society.
	That is a quick canter through some of the broad measures we are taking and I hope that it counters to some extent the picture that is sometimes painted of the Government as being interested in schools only as exam factories. I do not accept that that is an accurate picture of the aims and ambitions of the Government. I hope that some of the examples of the steps that we are taking across the piece will help to counter that.
	I turn to some of the specific issues that were raised, and if I fail to pick up on all of them, which undoubtedly I will in the time available to me, I will follow them up. The noble Lord, Lord Wills, talked about the transition from key stage 2 to key stage 3, which I agree is important. It is an aspect that we are considering as part of the national curriculum review. Obviously, PSHE was a theme that we came back to repeatedly. The review, which is continuing, is looking at the kind of research we heard about this afternoon, as well as the kind of evidence that the noble Lord, Lord Layard, brought to our attention. That consultation is going on and, as the noble Baroness, Lady Massey, knows, the review is being tied in with the broader national curriculum review that is under way. We are trying to bring the two together, but until we have done the second bit I am not able to go any further on the first bit.
	An important point was raised by my noble friend Lady Miller about universal credit and eligibility for free school meals. It is certainly the case that the intention behind the reforms to universal credit is not to reduce eligibility for free school meals, so we will work closely with the Department for Work and Pensions to make sure that in the definition, the priority for families with free school meals is maintained. We have talked about dance.
	Important points were raised by the noble Baroness, Lady Warwick of Undercliffe, about early years. A number of her points are being considered by the Nutbrown review, and the report is due. Ten early years teaching centres are being funded to deliver professional development and leadership support to foundation years providers in their areas, but if there are some more detailed points I can follow up in order to update the noble Baroness on where we are on that, I will do so afterwards.
	My noble friend Lady Tyler of Enfield talked about the importance of being able to spot mental health problems and general emotional and behaviour problems. I agree with her, and we are sharpening the focus on special educational needs in qualified teacher status. We have increased the number of placements for trainee teachers in special schools, up from 400 last year to 900 this year. We have provided funding for an additional 1,000 SENCO places this year. It is an important area and we will persevere with it.
	Another important point that was raised concerned careers. I agree that it is important to provide good careers advice. As noble Lords know, one of the changes we made in the Education Act last year was to devolve that responsibility to schools, who we think know their pupils. I agree with the point that was made about the most disadvantaged. The statutory guidance we have issued makes it clear that schools should consider particularly the needs of their disadvantaged pupils in the guidance they give.
	I agree strongly with the proposition that schools should educate the whole child. I also agree strongly that education is more than about learning facts and accumulating qualifications. It is about preparing children for the rest of their lives. As the noble Lord, Lord Layard, said, it is about inculcating a love of learning. But at the heart of that is the core task of equipping children well with the basic building blocks of education. We know of the terrible progression whereby illiteracy leads to so many other social ills. That is why the Government are so intent on raising educational standards, particularly in disadvantaged areas. I believe that if we can do that, it will make it much easier for us to achieve all the other desirable ends that noble Lords have discussed today and which I know we are all keen to achieve.

Baroness Jones of Whitchurch: My Lords, I do not intend to detain the House much further. As has been said, we have had excellent contributions from around the Chamber, although I am sorry that the Minister was so unsupported by contributions from his own Back Benches.
	As expected, the Minister has made a sterling effort to defend the Government's record and intent. However, I fundamentally agree with my noble friend Lady Morris, who argued very wisely that it is easy to make reassuring noises about the Government's intent but the lack of structure on which to hang the policies, and the lack of Ministers vocally championing some of these issues, is sending signals to schools that some of these issues are not really valued. Perhaps the Minister could take that message back.
	Ultimately, we are arguing about the balance between well-being and educational attainment. We have a slightly different sense of that balance from the Government; we disagree on it and over the months to come we will continue to try to persuade the Government that they have got that wrong.
	In a more positive spirit of cross-party co-operation, I will very happily volunteer to join forces with the noble Baroness, Lady Miller, to campaign for free school meals for all primary schoolchildren, and I can see a campaign developing from that.
	I thank all noble Lords for their contributions from around the Chamber. This debate will be ongoing.
	Motion agreed.

Banking Reform
	 — 
	Statement

Lord Sassoon: My Lords, I refer the House to the Statement on banking reform made in another place by my honourable friend the Financial Secretary to the Treasury, copies of which have been made available in the Printed Paper Office and the text of which will be printed in full in the Official Report.
	The following Statement was made earlier in the House of Commons.
	"Mr Speaker, the financial crisis exposed a great many flaws in the system. Banks borrowed too much, took risks they did not understand and bought securities that proved to be far from secure. Banking groups became too complex and interconnected to be managed effectively, regulators failed to identify the risks, and taxpayers paid the price. Between October 2008 and December 2010, European taxpayers provided almost €300 billion to prop up their banks, with liquidity and lending support in the trillions. In the UK, the bailout of RBS was the biggest banking bailout in the world.
	Just as the crisis revealed many flaws, there is no single solution. This Government are reforming the substance and structure of the financial architecture, putting the Bank of England in charge of prudential regulation. We have created the Financial Policy Committee to look at risks across the financial system. Our permanent bank levy penalises short-term wholesale funding, and we have introduced the toughest and most transparent pay regime of any major financial centre in the world. We have worked with our international partners to deliver robust, consistent standards on prudential standards for banks and markets.
	The White Paper we are publishing today sets out how we will implement the recommendations of the Independent Commission on Banking. These reforms form a key part of this Government's broader programme of reform. In the same way that the action we have taken on the deficit has meant that UK debt is currently seen as a 'safe haven' asset by investors around the world, we will ensure that British banks are resilient, stable and competitive, and so attractive to investors at home and abroad.
	The eurozone crisis makes reform more, not less, important. The link between the strength of a country's banking sector and its own stability could not be clearer. At the same time, our proposals reflect progress that has been made in European and international regulation since December. The Government welcome the European Commission's recovery and resolution directive, which will improve member states' ability to resolve cross-border banks without imposing costs on taxpayers. This Government will continue to press for full implementation of Basel III in Europe.
	The goals of today's White Paper are clear. First, since future financial crises rarely repeat the pattern of the past, we must make banks more resilient to shocks. Secondly, we must make our banks more resolvable so that, if they fail, they do not threaten the provision of vital services to the real economy. Seeing through these two goals will achieve our third: to curb risk-taking in financial markets. It must be clear that investors reap rewards when banks do well but take the pain if banks fail.
	The Government will ring-fence retail deposits from the risks posed by international wholesale and investment banking. A ring-fenced bank will be economically and legally separate from the rest of its group, and run by an independent board. The ring-fence will not stop a bank failing, but it will insulate the deposits of families and businesses and, if a bank does fail, these essential parts of the banking system can continue without recourse to the taxpayer. The deposits of individuals and their overdrafts, and the deposits and overdrafts of small and medium-sized businesses, will in general be placed in ring-fenced banks.
	To minimise the risks that the ring-fenced bank is exposed to, it will be prohibited from conducting the vast majority of international wholesale and investment banking. It will not be permitted to carry out activities through branches or subsidiaries outside the EEA, nor, except in limited circumstances, with financial institutions. Beyond this, and within certain constraints, firms may decide what to put inside the ring-fence. Ring-fencing provides customers with flexibility, but not at the cost of financial stability. The Government propose to strengthen the ICB's recommendations by applying strict controls on the use of derivatives that a ring-fenced bank uses to hedge its own balance sheet. This will ensure that a ring-fenced bank does not take excessive risks when managing its own risks, as was the case in JP Morgan's recent much publicised trading loss.
	Governance of the ring-fenced bank will be important. The Government propose to strengthen the ICB recommendations in this area, establishing separate risk and possibly remuneration committees. But it is important to focus these reforms where they have the biggest impact; that is, on the biggest, "too big to fail" banks. So the Government propose that smaller banks, with below £25 billion of mandated deposits, be exempt from these requirements. Large, systemically important banks have a competitive advantage from the perceived implicit guarantee. Our targeted reforms remove that advantage, helping smaller banks and new entrants.
	One of the clearest lessons from the crisis is that investors and creditors-not taxpayers-should bear the costs of failure. That is why we have supported Basel III, which increases banks' capital requirements to 7%, with a top-up for systemically important banks, and we have pressed for it to be implemented across Europe. But to protect taxpayers, this Government will go further. The largest UK ring-fenced banks should hold an additional 3% of equity on top of the Basel III minimum standards.
	The Government also strongly endorse the introduction of a binding minimum leverage ratio. The White Paper supports the Basel proposal of a 3% leverage ratio for all banks, including UK ring-fenced banks, and will continue to press for the implementation of the Basel standard through EU law. Large ring-fenced banks should hold a minimum amount of loss-absorbing capacity-made up of equity or debt-of 17% of risk-weighted assets. Their overseas operations should be exempt from this requirement unless they pose a risk to financial stability. For smaller UK banks, as the ICB recommends, the minimum requirements should be lower.
	To deliver these proposals, the authorities need a way to "bail in" bank liabilities so that bondholders, not taxpayers, bear the losses. The Government will work with European partners to ensure that the ICB's recommendations on bail-in are credibly and consistently applied across Europe, through the recovery and resolution directive. This Government intend to introduce the principle of depositor preference for insured deposits. Unsecured lenders to banks are better placed to monitor the risks that banks are taking on and they should take losses ahead of ordinary depositors.
	Our proposals on financial stability also improve competition in UK banking. The implicit guarantee to large banks distorts competition; its reduction will help create a level playing field. But the Government want to do more to encourage new entrants and promote competition. We will shortly issue a consultation on reform to the payments system.
	I welcome the reviews by the Bank of England and the FSA of the prudential and conduct requirements for new entrants to ensure that they are appropriate, not disproportionate. The Government strongly support the need for a strong challenger bank to emerge from the Lloyds Banking Group divestment, and are engaging with Lloyds and the European Commission to ensure that the divestment creates as strong a challenger as possible. A more competitive market will only work if customers are prepared to change banks.
	The Government are pleased with the progress on the industry-led initiative to make current account switching faster and easier for customers. Providers covering 97% of the current account market have signed up and the scheme is on track to be launched next September. But to switch, customers need better information, so the Government welcome the fact that the OFT and FCA will take forward the ICB's recommendation to improve transparency across all retail banking products. Work is already under way on a number of projects, such as making account data available to customers electronically to enable them to shop around.
	Financial stability is a prerequisite for growth. Our analysis suggests that the proposals in the White Paper will cost, in GDP terms, in the region of £0.6 billion to £1.4 billion per annum-compare that to the estimate that the 2007-09 crisis has already cost the UK economy £140 billion, 100 times the maximum cost estimate. So these proposals, while ambitious in scale, are proportionate in impact. They will promote financial stability while supporting sustainable growth and maintaining the UK's role as the world's leading international financial centre.
	The reforms we are announcing today, together with the changes we are making to the regulatory architecture, demonstrate that the Government are determined to take action to deliver a stable and sustainable banking system that underpins, rather than undermines, economic growth".

Lord Eatwell: My Lords, having read the Statement, I am most grateful to the noble Lord for not repeating it. He has rescued the House from some tedium. However, I am concerned that the new procedures are having the unintended consequence of shielding the Minister from embarrassment, particularly the embarrassment of having watered down the Vickers proposals, and from a number of serious ambiguities in the Statement. I have not had the opportunity to read the White Paper. I hope it will provide a better vision of the future of UK banking than does the Statement.
	We on this side of the House welcomed the Vickers report as a positive step along the road to making Britain's retail banking system safer, in particular protecting households and small and medium-sized firms from the instability that, as we have seen to our cost, may well be generated in wholesale financial markets, by banks' proprietary trading and by the complex interconnections that characterise today's global banking.
	The Statement suggests that one of the Government's goals is,
	"to curb risk-taking in financial markets".
	Can the Minister elaborate a little on this? As many have commented, a financial market without risk is the market of the grave. If Britain is ever to return to boisterous growth-something which under this coalition must be in increasingly serious doubt-financial institutions will need to take risks. Indeed, the expansion of credit is vital to recovery.
	How does the Treasury intend to monitor the risk that is generated within the ring-fence system? What is the Treasury's definition of "acceptable" levels of risk? What is the Treasury's estimate of the impact of these measures on the supply of credit to households and to small and medium-sized firms? For example, what will be the impact on the supply of credit of the severe limitations on wholesale funding of the balance sheet, given the important role that wholesale funding has played in the British banking system over the past decade? What will be the impact of the new leverage collar on the supply of credit? All these issues refer directly to the ability of British industry to receive the funding that it needs for recovery.
	What is the Government's intention with respect to the substantial flow of liquidity into the UK economy from the Crown dependencies? Since large companies will be outside the ring-fence and the failure of those companies would impose unacceptable costs on the UK economy, is it not clear that the Government's proposal has failed to deal with the issue of "too big to fail"? How would the Government deal with the failure of a non-ring-fenced bank that imposed destructive instability on large UK companies?
	The Statement also reads:
	"The deposits of individuals and their overdrafts, and the deposits and overdrafts of small and medium-sized businesses will, in general, be placed in ring-fenced banks".
	How can the Government be sure of this? What compels a saver to commit their savings to ring-fenced banks if those banks offer a lower rate of return than non-ring-fenced operations? Are the Government simply planning to force UK households to accept lower rates of return to secure the stability of institutions within the ring-fence?
	The Statement also declares that,
	"within certain constraints, firms may decide what to put inside the ring-fence".
	I presume, therefore, that they may decide what to put outside. What do the Government have in mind here? Why are they abdicating their responsibility to determine the boundary of the ring-fence?
	We are told that the Government have decided that ring-fenced banks should be required to hold 10% capital against risk-weighted assets. Whence do the Government derive the belief that moving to a 10% capital-to-risk-weighted asset ratio will provide the resilience that the banking sector requires to head off a serious crisis? This belief is without empirical foundation. A little investigation would reveal that Allied Irish Bank, the collapse of which devastated the Irish economy, always had a capital-to risk-weighted asset that was higher than that which the Government now propose as the basis of security of ring-fenced banks.
	More generally, it is well known that the outcome of regulatory actions-that they stimulate a creative response from the banks, creative in the sense that they work out ways to circumvent or evade the regulations-reduces the impact of regulatory innovation over time. How do the Government intend to keep the operations of the ring-fence under review? Would it not be appropriate to keep the Independent Commission on Banking in being and charge it with the task of reviewing regularly the performance of the ring-fence? Why not ask Sir John Vickers and his team to return to the issue-let us say-12 months after the ring-fence has been introduced?
	What is to be done on the timing of this legislation? We have before the House a Financial Services Bill the structure of which, as has been recognised by the Government and throughout the House, is seriously deficient. Would it not be better for the Government to withdraw that Bill, go back and rewrite it in a way which corrects its deficiencies, and incorporate the new measures from the Vickers report and the White Paper in that revised Bill? The House would then have the opportunity of assessing in its entirety the new framework for financial services in this country, rather than this hotchpotch of measures being introduced one after the other without clarity as to the way in which they relate to one another.

Lord Sassoon: My Lords, I am sorry that the noble Lord, Lord Eatwell, has not yet had a chance to read the very detailed White Paper because, when he does, he will see that a lot of his detailed questions have been addressed.
	I find it disappointing that the noble Lord comes here and takes such a picky attitude towards this fundamentally important reform being introduced by the Government. The previous Government had two years in which to act on the collapse of Northern Rock and then on the failures of RBS and Lloyds and did absolutely nothing about them. Did it not occur to them that there might be a problem with the structure of banking in this country? It seems not. For two years, they sat on their hands, asked no questions and did nothing. When this Government came into office, we established within weeks the Independent Commission on Banking under the chairmanship of Sir John Vickers. It has come up with a very fine report to government. We have considered it very carefully and have published our final response today. What we have before us is one of the most radical reforms of banking that I suggest the world has ever seen.
	Why have we done that? We have done that because we face in this country something which my right honourable friend the Chancellor has characterised as the British dilemma: how do we continue to host a world-class financial services sector, a sector in which our banks are able to go out to compete vigorously, as they do, around the world with the best and biggest that the rest of the world has, without putting the UK taxpayer at excessive risk? That is what is encapsulated by our response to the Vickers commission, a response that picks up the essence of what Vickers recommended but which interprets it in a way that is appropriate, flexible, forward-looking and balances those key interests of ensuring that we have a world-class but safe banking system.
	The noble Lord, Lord Eatwell, talked about risk-taking in the financial markets. The critical thing is that we want to make sure that the parts of the banks within the ring-fence, the parts of the banks in which the savings of the men, women and children of this country go, are properly ring-fenced and protected-the parts of the banks which service the SMEs of this country. We want to ensure that there is not inappropriate risk-taking within that ring-fence. The noble Lord asked how that is to be monitored. It is not for Her Majesty's Treasury to monitor it; it will be up to the Financial Policy Committee to look at the system as a whole-as it already is in interim form-and it will be for the Prudential Regulation Authority, under the Bank of England, to supervise individual firms in future.
	The noble Lord then talked about curbs on growth. That area is very important, because the flow of credit must go on, particularly at this time of challenge in the economy. That is precisely one reason why Sir John Vickers and the commission recommended that the implementation of the recommendations should be concluded by 2019, a recommendation that we have accepted. The numbers are set out in the document, but I suggest that the costs of implementation over that period and beyond on a running basis are very modest in relation to both the cost of the banking crisis over which the previous Government presided and the size of the UK economy.
	The noble Lord then referred to the flow of funds in from Crown dependencies. He is clearly an expert on this subject. I believe that he is on the regulatory body of the States of Jersey. I am aware, as he is, that significant deposits flow from that and other Crown dependencies into the UK wholesale markets. That plays an important part of the funding of the wholesale markets and should continue.
	The noble Lord, Lord Eatwell, then asked: what compels a saver to deposit his or her money in a ring-fenced bank? The fact is that 87%, or thereabouts, of deposits in the banking system at the moment are within banks that will be subject to the ring-fence. It is highly implausible to suggest that it would be wrong to protect 90% of the deposits of the British public but not to say that there are other places that are not ring-fenced that are accessible. What the noble Lord presents is not a realistic picture. Sir John Vickers and his commission raised the question of a de minimis limit and we set a limit that the ring-fence should not operate for banks with deposits below £25 billion. I suggest to the noble Lord that one thing on which we might agree is that we need more diversity, more competition, and more new entrants in the banking sector. It is entirely appropriate, we believe, that the ring-fence should operate for only the biggest of our banks-those which account for some 90% of deposits.
	The noble Lord then asked a number of technical questions about the way that the ring-fence will operate. I refer him to the details in the White Paper. If he has further questions that it does not answer, I would of course be happy to write on any supplementary questions that he may put, but there is a very full analysis there.
	As to the capital ratios proposed here, the noble Lord talked about the Government proposing them but of course what analysis there was underpinning them was all the ICB's analysis. The Government have done one thing in this area today, which is to put out a 3% rather than a 4% ratio against total unweighted assets. That is to create a level playing field with what is proposed in Europe. We want this measure to be not a front-stop but a back-stop, in line with what the ICB proposed, and we want to make sure that our banks have every opportunity to compete on a level playing field.
	The noble Lord then asked whether we should ask the ICB to return to the operation of the ring-fence, by keeping it under review and coming back to it one year after it comes into operation. Given that the implementation date is set by Sir John Vickers at 2019 it might be a little unreasonable to Sir John and his commission, who have done tremendous work on this, to keep them on the hook until 2020, or later, to ask them to come back to these issues. I am sure that there will be other ways of looking at the impact of these measures in due course.
	Lastly, the noble Lord asked whether we should put these measures into one Bill with those in the Financial Services Bill, which is already before your Lordships' House. This is to misunderstand the different nature of what is being addressed here. On the one hand, the Financial Services Bill deals with the structure of regulation and, on the other, the measures that we are talking about today relate to the structure of banking. I accept of course that the two things taken together are the measures that, combined, will make sure that this country has a world-class financial services sector and will not put UK taxpayers excessively at risk. However, they are two sets of distinct measures. Your Lordships will now have them in front of you so that you can read across from one to another but any suggestion of delaying the legislative process, which the noble Lord and others have constantly urged us to get on with, would be wholly inappropriate.

Lord Eatwell: Before the noble Lord sits down, I would like to press him on a question on which I am genuinely puzzled. The Statement refers to the idea that UK households will place their deposits in ring-fenced banks. Why should they do that if the rate of return is higher on non-ring-fenced banks than it is on ring-fenced banks, and why should not an innovative financial sector create devices whereby households can take advantage of a higher rate of return in non-ring-fenced financial institutions? We are not planning-or are we?-to reintroduce Regulation Q as it was in the United States, where there was a limitation on the return that households could receive on their deposits to force those deposits into the commercial banking system.

Lord Sassoon: My Lords, at the moment depositors have freedom as to where they place their deposits. It is certainly not the case that the vast majority of deposits go to the outliers, as there always are, in offering returns. When it comes to the future arrangements, I would anticipate that the vast majority of deposits will stay where they are. For better or worse, that is the system with a number of very large incumbent banks, which will all be ring-fenced. It will be very clear to people what the difference is between ring-fenced and non-ring-fenced banks. The Statement made by my right honourable friend was merely a clear statement of observed behaviour and likely behaviour into the future-not a Statement saying that people "must" or "are compelled to", or that they do not have any choice. Of course they will have choice, but 90% of the deposits are where they are today and I anticipate that that is not somehow going to be magically changed overnight.

Lord Bilimoria: My Lords, building on what the noble Lord, Lord Eatwell, has just said, if we look back at the financial crisis, the FSA was asleep on the job, and that is being addressed by the Financial Services Bill. There is no question about that. The organisations that have got away scot free in the banking reform and the Financial Services Bill are the credit rating agencies, which were so much to blame globally for the crisis, the credit crunch and the great recession. Will the Minister address that point? Secondly, does he agree that it is surely a question of balance? Have we got the balance right with the banking reforms? There is no question that the good point about the big bang is that it opened up the economy, but the negative is that it is probably too open and not regulated enough. Are we going too far here? Quite frankly, this looks like Groundhog Day to me. We have been here before in 1933 with the Glass-Steagall Act. What lessons have been learnt from that? Have we not learnt?

Lord Sassoon: The noble Lord, Lord Bilimoria, makes a very good point about the credit rating agencies. The Bill is about the structure of banking. Credit rating agency regulation is now essentially in the hands of the European Commission. The appropriate sub-committee of your Lordships' European Union Committee produced an excellent report, which we debated recently, on this subject. Yes, we must keep the subject of credit ratings under discussion, but the competence is not primarily here, and it is not the subject of the Statement we are addressing.
	On the lessons of history, Glass-Steagall and so on, this is a different model from the Glass-Steagall model and from the model that the US is implementing at the moment. The Commission talked to a very wide range of people and, I am sure, studied the history very carefully. In the knowledge of the current and historical international precedents, that was its fundamental judgment about the high but flexible ring-fence. I believe it has come up with something that takes all those lessons on board, is appropriate for what we need now and is not going to impact significantly on the necessary driver for growth in this country, which is keeping credit flowing this year, next year and the year after.

Baroness Kramer: It is with real pleasure that I welcome the White Paper and the Statement by the Minister. He will be aware that my colleagues in both Houses, especially Vince Cable, have long called for the structural separation of vanilla banking from more speculative investment banking. We look at Vickers and the White Paper as a very acceptable and effective compromise. As a result of its structural nature, ring-fencing has far more possibility of resisting erosion over the years as the masters of the universe regain their confidence and begin to attempt to transfer risk back to the taxpayer.
	The Minister mentioned the Government's decision to stick with the 2019 timetable. Is that a really robust measure? He will have heard some of the major banks trying to put a bit of pressure on this. A long-grass strategy is clearly under consideration by those who are resistant to these changes.
	I see no reason why the Financial Services Bill should be held up to make way for legislation that comes from this White Paper, but will the Minister and his team take a look to make sure that what is likely to flow from this can find a framework and that there will be genuine capacity within the Financial Services Bill? He will know that I am particularly taken with the section in the White Paper called "A More Diverse Banking Sector". I am delighted to see that and the whole competition area in the White Paper emphasised so strongly. Will he make sure that the capacity for that exists comfortably within the Financial Services Bill when it leaves this House?

Lord Sassoon: I am grateful-

Lord Rees-Mogg: My Lords-

Lord Sassoon: Perhaps I might answer my noble friend first. I am grateful to her for welcoming these next steps as we implement Vickers. On the questions about timetabling, we are firm not only on implementation by 2019 but on sticking to our commitment to completing the passage of the legislation in this Parliament, which allows for time for pre-legislative scrutiny this autumn and a proper and full process. On her point about whether we have thought about the read-across to the Financial Services Bill, we have done so-for example, we have picked up the Vickers recommendation about the FCA having a competition objective, and that is already drafted in the Financial Services Bill. There will be other important elements, such as account-switching, that will come in from September 2013. Everything fits together. I appreciate her recognition that a more diverse banking sector has also been thought about; it is a very important element of this.

Lord Tugendhat: My Lords, I welcome the Statement and I congratulate the Government on the speed at which they are moving. I have one question: where one part of a bank is within the ring-fence and one part is outside, does the White Paper say anything about auditing? Would one expect there to be the same auditors for both parts of the bank, or would they expect to have different auditors? Does the White Paper take a view on that?

Lord Sassoon: As far as I am aware, there is no prohibition or restriction on the use of auditors. I am pretty sure that the audit position is not addressed, but if I am wrong about that I will write to the noble Lord.

Lord Rees-Mogg: My Lords-

Baroness Northover: My Lords, to be fair, it is actually the turn of the Labour Benches. If they are happy, then we will hear from the Cross Benches first before hearing from the Labour Benches. I think that the noble Lords have given way.

Lord Rees-Mogg: We were just brewing up to have a very satisfactory little argument about the Glass-Steagall Act. The important thing about it is how long it lasted; it was passed by the Senate in the 1930s and ultimately repealed by President Carter, who had been persuaded to do so by Wall Street. Its great virtue was that it identified more clearly than previous legislation, and more clearly than most subsequent legislation, the difference between retail bankers and what you could call casino bankers, and put different responsibilities on them. That protection worked. If one went, as I did, to Wall Street in the 1950s, one found that Wall Street had come to the conclusion that it was not going to have another slump, primarily because of that Act but also because of the wartime Bretton Woods agreement, which was masterminded by our very own Maynard Keynes. This is a consistent fruit. The set of ideas that were developed in response to the crisis of the early 1930s worked their way through the financial body and the intellectual body, and gave us what we are now looking for-a restabilisation of our own economy in its own terms.

Lord Sassoon: The noble Lord, Lord Rees-Mogg, of course speaks with great authority on these matters. All I do is to say that I listen with great interest to his historical analysis.

Lord Desai: My Lords, before we had the report from Sir John Vickers at the commission, there was talk of living wills that banks would make. Whatever happens, we are now to make quite sure that the taxpayer does not once again have to bail banks out. While it is all right to have ring-fencing and so on, we have to remember that Northern Rock was not a bank with investment banking divisions. It was a bank which failed purely because of misbehaviour. Are we sure that, whatever happens, if even a ring-fenced bank fails it will not be rescued by the taxpayer?

Lord Sassoon: The noble Lord, Lord Desai, as always, brings up important points. Of course, living wills are an integral part of the whole construct for better resolution of banks than we had before. Indeed, the FSA has been leading the project for a couple of years or more to make sure that all the arrangements are in place. The noble Lord draws attention to another important part of the construct.

Lord Bates: But can my noble friend confirm that the banking crisis actually cost the taxpayer, in direct cash, loans and guarantees, close to £500 billion-£465 billion pounds? Therefore, it behoves the Government to take some action to protect savers and the interests of the taxpayer in this regard. The introduction of the leveraging ratio is therefore welcome, particularly as it follows international norms rather than putting our industry at a competitive disadvantage.
	I have one small, technical point. The Minister has an incredible grasp of the detail, but does my noble friend have understanding of whether there will be any implications of introducing that leverage ratio for the Government's holdings in Lloyds Banking Group and RBS?

Lord Sassoon: I am grateful to my noble friend for pointing out the extraordinary cost of the banking crisis. He cites one figure; I think that the estimates ranged from £140 billion upwards. They are extraordinary figures, which, as I said at the outset, the then Government did not seem to think required any response. I completely agree with my noble friend Lord Bates that something needed to be done, and that is what we have brought forward.
	As for the effect on the Government's holdings in RBS and Lloyds, I am sure that your Lordships like reading, as I do, the fine detail of impact assessments. At the back of the White Paper, the impact assessment contains several paragraphs analysing the effect. It gives a number on a rather theoretical comparison of what the effect might be, but then points out that this is probably already priced into the market so that the price of the holdings today takes account of what is proposed.

Lord Jones of Birmingham: My Lords, I declare an interest, and refer noble Lords to the register of interests, advising both providers of finance and also those who consume it. I remember my Yorkshire grandmother when I was about 12 saying that it was a condition of my Christmas present that an account was opened at the Halifax Building Society, and it went in there. Little did Grandma Jones ever believe that that money and its successor funds would be used to be gambled by the Bank of Scotland on commercial folly, so I congratulate the Minister on a good start.
	However, of course we have one or two problems. First-and I would welcome the Minister's comments on this-I notice that the Statement includes SMEs inside this ring-fence as well as private individuals, the provision of retail, the taking of deposits and the provision of finance. The problem is: how do we get capital and liquidity back into the small business sector? Bigger businesses have balance sheets awash with cash but lack the confidence to invest it. At this moment, smaller businesses do not. One of the biggest reasons for this is that they have lost trust in the banking sector. If you had a good credit record in 2008 and 2009 but had your credit facility taken away and had to borrow from friends and mortgage your house, you are hardly likely to trust the bank the next time around. Today does nothing to help that unless you make a virtue of necessity and prove to small business that this will in some way free up capital towards the provision of liquidity. I am not sure that this measure in any way does that and would welcome the Minister's comments.
	Secondly, there is the enormous problem of how you get the balance right so that we are seen as a well regulated, safely executed and prosecuted banking environment, without encouraging the most successful of our globally competitive sectors not to leave these shores. It would not go elsewhere because of all the problems with salaries and bonuses and the vilification of banking, but because it will just become too difficult to lend here and easier to lend in other markets. I ask the Minister, and I include his coalition partners in this-it would be nice to have a Secretary of State for Business who supported business for once-whether, just for once, some positive words might come from the Government about the financial services sector in this country, rather than constant smacking instead of encouragement.

Lord Sassoon: My Lords, the noble Lord, Lord Jones of Birmingham, is always rightly concerned about the financing of British business, which is very important. Today's measures are not principally about that. I could talk about the £21 billion national loan guarantee scheme or the fact that our 10-year sterling sovereign rate has been in the 1.5% to 1.7% range for the past few weeks, which is an unprecedented level. That all flows through. Here, we are significantly reducing the risk of another banking crisis. It was that crisis-the disruption and its aftermath-that caused such difficulty in the flow of loans to our businesses. Whatever we do here to minimise the chances of it happening again must be good for our businesses.
	As for the UK being a competitive centre of banking, the Government are working incredibly hard. For example, only this morning I was at a very important meeting with businesses and authorities from the UK and Hong Kong, talking about how we would build the offshore RMB centre in London. That is an example of the forward-looking approach that we take to making sure that the UK and London continue to be the global financial centres of choice.

Baroness Drake: My Lords, I have only just had time to read the White Paper but I ask the Minister to elaborate on two issues. The Statement makes it clear that the strength of a country's banking sector strengthens its stability and gives it a competitive advantage-a view that I endorse. However, that view clearly worried the European authorities, as evidenced by Mr Enria's evidence to the Joint Committee on the Financial Services Bill. These are my words, not his, but he expressed the view that capital requirements for banks in Europe should have both a minimum and a maximum. However, the White Paper confirms that the Government support the ICB view that further buffers should be added to those of the Basel III international standards, and that the Government will, through the CRD4 negotiations, work to ensure that they can be implemented in accordance with EU law. Therefore, my first question is: how confident are the Government of securing the national regulatory freedom to impose the additional capital buffers that they would like to see?
	Secondly, I am pleased to read in the White Paper that, for the first time, the position of pension funds in the ring-fencing will be important. The issue is to do with making sure that the regulatory framework for pension funding is not breached when dealing with the banking separation.

Lord Sassoon: In answer to the noble Baroness's first point, we are confident, and we are absolutely on top of and watching her second point, which is important.

Baroness Wheatcroft: My Lords, I welcome the White Paper and the accompanying Statement. Separating risky banking from core retail banking is essential but we have to be careful that the ring-fence does not become a Chinese wall. It will take some policing. We also need to be very careful in watching to what extent the hedging that will be allowed within the ring-fence is monitored by the various authorities. I have some qualms about that.
	I am also concerned about the timetable. I am delighted to hear that the 2019 deadline will stay but I am puzzled as to why that needs to be the case for more than the capital requirements. I would have thought that the ring-fence might have been installed sooner than 2019, which sounds a long time away. My final point is about why on earth households would put their money into a ring-fenced bank. I cannot see why their money should be guaranteed if they put it in a riskier institution. Perhaps the Minister will answer that.

Lord Sassoon: I would very much like to respond to those points but I see that the clock has reached 20 minutes. I do not like to do this but I had better write to my noble friend Lady Wheatcroft on these important points.

European Rail Market: EUC Report

Tunnel Vision? Completing the European Rail Market

Motion to Take Note

Moved By Baroness O'Cathain
	That this House takes note of the Report of the European Union Committee on Tunnel Vision? Completing the European rail market (24th Report, Session 2010-12, HL Paper 229).

Baroness O'Cathain: My Lords, this report is the result of the work of the sub-committee on the internal market, infrastructure and employment, which I chair; work that was carried out engagingly, energetically and, dare I say, enthusiastically by all members of the committee. I pay tribute to them and thank them for their sterling work. The work programme and the final report could not have been completed in such a professional way without our clerks, John Turner and, from October 2011, his successor Mark Davies, together with our policy analyst, Michael Torrance. I thank them most sincerely on behalf of the whole committee.
	The members of the committee recognise that the most important challenge facing this country, and indeed facing other European member states, is ensuring strong and sustainable growth. Ensuring a strong internal market with a well developed transport network to connect trading partners is critical to that growth. The European Commission's 2011 report, Roadmap to a Single European Transport Area, identified rail as being central to that objective. This guided our choice of topic. Our committee also determined that as part of our inquiry we should have a consumer focus noting that, sadly, the consumer is left out of a great deal of the discussions on the European Union.
	The Channel Tunnel opened in 1994 as a means to give fresh impetus to relations with France and mainland Europe but also as an important step in expanding the internal market, easing the movement of both people and goods. As an aside, let us never forget that the internal market is an enduring tribute to the Government of my noble friend Lady Thatcher following the publication of the White Paper on completion of the single market in June 1985. The committee felt that an examination of the challenges facing the operation of the Channel Tunnel and the obstacles to the fulfilment of its potential should act as the lens through which we focused our assessment.
	Our first findings rocked us somewhat. Capacity utilisation for freight was around 10% and that for passenger services was around 50%. Not making too fine a point of it, this seems an abject failure to utilise an undoubted asset. Our overall conclusion was that there were many obstacles which should be addressed. Those with a suspicious mind could wonder whether some of the obstacles were based on the status quo position-the idea that "if it ain't broke, don't fix it". Well, don't fix it, it does work-but neither as efficiently nor as effectively as we think that it could. The continued fragmentation of the European rail market is a true barrier to trade. The remaining technical, administrative and legal obstacles must be addressed, and rapidly, as such action would surely encourage economic growth. The Government's response agrees but there does not seem to be a huge sense of urgency.
	I should like to explain briefly the nature of six of the obstacles. First, there is a need to establish strong and independent regulators. That does not mean more powers to Brussels. It simply calls for better use of existing powers. We did not recommend the creation of an EU-level economic regulator and the government response supports our view.
	Secondly, we suggest that the actual governance of the Channel Tunnel should be reviewed. A figure on page 19 of the report shows the complicated structure. One of our witnesses, Professor Vickerman, was clear that the structure was,
	"no longer fit for purpose".
	More than 25 years after the treaty of Canterbury, which established the model, now is an opportune time to examine it. The Government, though, are not convinced. They stated in their response that they see,
	"no imperative to review the Treaty. Nor do we believe there is any appetite for renegotiation of the Treaty on the part of the French authorities".
	My third point is that there are almost certainly obstacles in the commercial operations of the tunnel. Obviously, the more operators running services through the tunnel, the greater the competition and the wider the choice both for freight operators and consumers. Although there is now more than one freight operator, Eurostar remains the sole provider of passenger-only services. Deutsche Bahn has applied to operate services, but I hear that there are further delays to the application process. That cannot be acceptable. We recommend that authorisation should be granted without undue delay. Many obstacles seem to have been put in the way, as detailed in the report, although I have to admit that I remain to be convinced of their validity based on the evidence that we received. I just hope that it is not one of those very old non-tariff barriers to trade that bedevilled my early career in both the motor and food industries.
	The fourth obstacle we identified were the charges for use of the tunnel set by Eurotunnel, the company that won the concession to build and operate it. We appreciate that they comprise a significant part of Eurotunnel's income, particularly as it is a private company that has to cover construction and running costs, but we concluded that a reduction in the medium term could serve as a powerful fillip for the development of passenger services, and a concomitant for growth. New entrants could be deterred from seeking authorisation to provide services if the access charges are not fair, predictable and more easily available.
	For my fifth obstacle, we come to one of those words that does not exist in the very large dictionary that we have in the office upstairs-interoperability. Actually, it means what is says, I am told, and I suppose we will get used to it. The EU-wide technical standards for interoperability, known as TSIs, set out comprehensive safety standards, including for long tunnels. The Channel Tunnel, though, has distinct and unique standards. We were not convinced that the Channel Tunnel is a unique case. Two committee members, the noble Lord, Lord Bradshaw, who is sadly not in his place today and is unable to attend this debate, and the noble Lord, Lord Berkeley-together they are the most knowledgeable train experts in Parliament-paid their own expenses to go to Switzerland to investigate the justification. They were not persuaded and, when we heard their comments, neither were we. The Government's response was to state that:
	"Detailed work is underway to address the remaining issues. Where this work demonstrates that specific requirements are no longer necessary, we anticipate that those requirements will be rescinded".
	When does my noble friend the Minister anticipate that the work will be completed and how long afterwards will the requirements be rescinded? This exercise is delaying the ability of other operators to provide additional services, thereby inhibiting competition; competition which would almost certainly benefit the consumer. Of course, safety is paramount, but it should not be used as a smokescreen.
	The sixth of the identified obstacles that I choose to deal with in this debate relates to security. It is an obstacle to expansion. Of course, we are much more security conscious today than we were when the Channel Tunnel first opened for business and, sadly, concerns in this area are unlikely to decrease. All areas of our lives are affected but there is a widespread feeling that the measures and methods employed in this area seem to be somewhat inefficient. The tunnel uses what are called "juxtaposed border controls"-yet another strange phrase-involving the checking by both UK and French officials before authorisation for departure. With the hoped for extension and expansion of services, this process could be unsustainable. The Government must look again at their approach here and their commitment to reviewing these arrangements is very welcome.
	I return to the need for customer focus. Consumer interests must be brought to the fore. Chapter 6 of the report details all the current "irritant factors", including through-ticketing problems and opaque information on passenger rights. These, coupled with some language difficulties, can make the wished for wonderful experience of travelling to and from the mainland of Europe a potential nightmare. We are unanimous that the customer should feel valued and hope that our report will make a move in that direction a reality.
	Having touched the surface of the scale of the challenge ahead, I hope I have convinced noble Lords that something should be done. The Channel Tunnel could, should, and indeed must be an important part of a thriving European rail network-one that is popular, efficient, easy to use and promotes growth. There is much to do and we need a real sense of urgency to do it, especially when the possibilities for the Channel Tunnel fall into the win-win category.
	I thank in advance all who are taking part in this debate and I am looking forward very much to their contributions. In particular, I look forward to the response of my noble friend Lord Attlee, hoping that he gives the report strong support and shows a commitment to adopting an urgent approach to the recommendations.

Lord Faulkner of Worcester: My Lords, I congratulate the noble Baroness, Lady O'Cathain, on the excellent way in which she introduced this debate. I do not think that she said a word with which I disagreed. I also congratulate her and the other members of the sub-committee on producing a very impressive report.
	As many of your Lordships know, I am a passionate supporter of the railways and I am keen always to see their role in the provision of national and international transport expand. It is clear that the sub-committee shares that view. Fifty years ago, the railways of Europe looked very different from how they look today, but common specifications set out by the International Union of Railways meant that rolling stock could cross the continent regardless of national boundaries, albeit with a change of locomotive at frontiers.
	Some of us are old enough to remember the blue sleeping cars drawn up at Calais Maritime behind a steam locomotive ready to take British passengers from Calais to the south of France or to Venice. You could take a direct train from Paris to Istanbul or from Ostend to Moscow. Trains of fruit from Spain, motor scooters from Italy or manufactured goods from Germany and France crossed on train ferries, as did the night ferry sleeping car train each night from Paris and Brussels to Victoria. Then, in the 1970s, with the development of high-speed routes, new multiple-unit trains and the move to containers, this universal compatibility broke down. The market failed to deliver a common solution, national railways focused on internally set objectives and the European Commission was slow to react to those changes.
	From being the odd one out in Europe in the 1960s, Britain is now at the heart of railway technical and operational development. Eurostar shows how trains can cross frontiers seamlessly, not just between Britain and France but on into Belgium as well, and soon further into Germany and the Netherlands. Far from changing the locomotive at the frontier, the train crews themselves work right through to Paris and Brussels. In this case, the different technical standards in each country have been overcome with the remarkable trains that can, at the turn of a selector in the driver's cab, handle four different types of traction current and signalling systems.
	Today's debate is important because, as the noble Baroness said, there is scope to attract more people to use international rail services and because much more needs to be done to encourage rail freight through the tunnel. The sub-committee's report makes an important contribution to moving this argument forward.
	Cross-channel services are always going to be more complex to operate than domestic services because of the involvement of Eurotunnel, which has its own shuttle services to consider, and the fact that the only link to the rest of Europe requires the active co-operation of SNCF between Coquelles and the Belgian border.
	On the freight side, international traffic via the Channel Tunnel seems not to be a priority for SNCF. In the past, this has been reflected in poor reliability and problems in arranging additional trains at short notice. Whatever technical or legal solutions are proposed, clearly a lot of work needs to be done to encourage a different approach by SNCF.
	On freight, it is always going to be difficult to build rail market share when the cost of taking a container through the tunnel can be lower using a lorry on Eurotunnel's shuttle compared with a freight train, and this reflects the usage charge. There needs to be a move towards charging avoidable costs for freight-as is the case on Network Rail at home-if market share is to have a chance to grow.
	There is little in the way of fair competition between road and rail freight. European hauliers do not pay towards UK infrastructure costs, for example, nor do they pay fuel duty if they fill up before crossing to Folkestone. The choices are difficult: there needs to be either some form of subsidy or cross-subsidy for rail freight operators to use Eurotunnel's infrastructure or a charge for other European hauliers to use the infrastructure that Britain currently provides at no cost to them.
	The sub-committee is right to draw attention to the inherent contradictions surrounding Eurotunnel's operation. This is Britain's only fixed link to mainland Europe. It is a privately owned concession where the concessionaire also runs a shuttle service for freight and passengers, and, at the same time, it is the infrastructure authority for through trains, which themselves have to fit both Eurotunnel's train paths and the available paths on Network Rail and its French equivalent.
	Up to now, this process has been left to the market. The sub-committee's report shows that this is not working and, as demand increases, action will be needed to optimise the use of the one pair of tracks that link the British and French rail networks. Our own British experience on the east coast main line is that the only way to optimise capacity on a constrained railway with multiple operators is by strong focused planning of the way in which that capacity is used. In the case of the east coast main line, this has been done by the Department for Transport as the specifier of franchised services on the route, but the needs of freight and two open-access passenger operators have been protected as well.
	The question therefore is: can Eurotunnel perform that role or does this need action by the IGC or a specially convened group of train planners from Network Rail, Eurotunnel and the French infrastructure owners? I am advised by Eurostar that Eurotunnel declines to take part in any of the intra-European path allocation discussions and it has not been keen on changing passenger train paths, even when that would reduce journey times or allow more trains to use the tunnel at peak times.
	Eurostar also makes the point that the current structure of access charges needs to be reviewed. The per-passenger toll is preventing new markets from being developed which would otherwise be able to cover the direct operational costs. There needs to be a lot more openness and transparency in the allocation and recovery of costs and there needs to be a proper policy for discounts.
	As an example, if we compare a London to Paris journey, the total infrastructure charges-that is, terminal costs, handling fees and landing charges-for a flight are around £2,400; for a Eurostar train to Paris they are £21,500, of which the tunnel accounts for £12,500. Even taking account of the fact that a Eurostar train tends to carry two and a half times as many people as a plane, that is still a huge difference.
	The sub-committee is right to draw attention to the spare capacity that exists in the Channel Tunnel, to which the noble Baroness referred, but it is not hard to see why that exists. It is my belief-I think that the Government share this view-that the future lies with longer-distance high-speed rail travel. I hope that the Minister will say that when he replies. The desirability of building a new high-speed railway obviously has not been part of the sub-committee's remit for this inquiry, but I suggest that it is relevant when taking a rather longer view, particularly taking into account the Government's decision to abandon the building of a third runway at Heathrow or to expand other capacity at other airports in the south-east-a policy that I support, as the Minister knows. The correct approach, in my view, is to manage demand for short-haul air travel and for us to follow other countries by building high-speed rail capacity. The central part of that approach will be to make proper use of the Channel Tunnel, which is why I think that the sub-committee is on the right lines.
	Finally, I want to say something about another barrier to long-distance international rail travel that we have erected for ourselves in Britain. One weekend last month, I travelled by train from Budapest to Berlin and then back to Brussels, passing through five different countries. I was not subjected to a single passport or security check throughout the journey. When I got to Brussels and took the Eurostar to St Pancras, there were three passport examinations and my luggage was searched before I got on board. With great respect to the Government, it is not good enough for them to assert that these checks are necessary because Britain is not part of Schengen, and the sub-committee is right to draw attention to that. We are not searched when we board long-distance trains in Britain and I see no reason why the railway should be dragged down to the level of the airlines in this respect. I am disappointed that the Government's response to the Select Committee report seems to be so inflexible on this issue.
	I conclude as I began, by expressing my admiration to the sub-committee for producing a good report, which if implemented would be of real value to the railways, rail passengers and the country as a whole.

Baroness Scott of Needham Market: I thank the noble Baroness, Lady O'Cathain, for so ably introducing today's debate, and should like to say how much I look forward to being a member of EU Sub-Committee B as a refugee from my spiritual home of Sub-Committee G.
	For much of its long history the Channel Tunnel was primarily thought of as an Anglo-French or Franco-English enterprise, and its construction pretty much entirely predates European Union rail policy. The report highlights very well how utterly that context has changed, and how poorly the single rail market functions across Europe because of what I would charitably describe as patchy compliance with the liberalisation agenda. It is interesting to speculate on whether the tunnel's current operation itself is a hindrance to growth or a victim of the conformity of much of the rest of Europe to liberalisation.
	Personally, although I have a scintilla of sympathy with the view of the Office of the Rail Regulator-which cautioned against revising the treaty of Canterbury on the understandable grounds that the protracted nature of the process would divert attention away from more immediate issues facing the railway-I believe that so much has changed in the quarter century since it was signed that a review is inevitable. The sub-committee has done a great service in highlighting some areas where the governance is working against passenger interests and those of freight. Of course an adverse EU ruling on the tunnel's arrangements and whether they conform to rail legislation might force the matter, so perhaps I may gently suggest to the Government that they look at jumping before they are pushed.
	The stated objective of the EU and, indeed, of the UK Government is to see a transfer from short-haul flights to rail. That is certainly understandable from a climate change point of view. However, setting that aside, it makes sense to make better use of the very limited capacity at our busy airports. Whatever we think about an extra runway at Heathrow or increasing capacity elsewhere-or even "Boris Island"-it will take years to get that sort of extra capacity. Therefore, making better use of rail is a sensible part of aviation strategy. The enthusiasm of Deutsche Bahn to develop routes between Amsterdam, Frankfurt and London is a good example. I hope that progress can be made on the scheme, which is currently mired in what look suspiciously like restrictive practices.
	I was compelled by evidence given to the committee by The Man in Seat Sixty-One. It chimed with my personal experience that reducing carbon emissions is not a major incentive for people to switch to rail; they are deterred by the stress and time involved in airport checks, the delays to air travel and the extra charges that are often well hidden until you are a long way into the process. To that, I would add the time and expense of travelling to and from major airports. Heathrow Express is a lovely service but-my goodness-at £34 for a standard return fare, it is very expensive. The Man in Seat Sixty-One estimates that these factors account for 80% of the incentive to switch to rail, and climate change only 20%. What I conclude from that is that the desired modal shift will not just happen because people will have an attack of green consciousness but because it will be easier for them. We will have to work on that.
	The good news is that clearly there is capacity in the tunnel. I was struck by that two years ago when the volcanic ash cloud halted air travel all over Europe. The Channel Tunnel provided a much needed and very valued way to move passengers at a difficult time. However, it was only able to do so because it was so underused. The initial forecasts of 17 million to 20 million passengers a year proved wildly optimistic, with today's figure being in the region of 9 million to 10 million. As we have heard, the evidence is that less than 50% of passenger capacity is being used, and 10% of freight capacity. I am not aware of any capacity issues on the road network on either side of the tunnel that would prevent growth in usage, nor on the High Speed 1 side-although, as the noble Lord, Lord Faulkner, said, there are issues in northern France. I hope that the Minister will say whether the Government are addressing these with the French Government.
	Competition is undoubtedly the best way to get a good deal for passengers, and I share many concerns expressed in the report about the potential for the current arrangements utterly to distort competition. Access charges are high, and make freight travel in particular simply not competitive with travel by sea-or even, as we have heard, with travel through the tunnel. The access charge alone for a passenger on Eurostar is £32. That will severely restrict its competitiveness against air travel
	The decision-making process is riddled with conflicts of interest. One is the involvement of the UK and French Governments through the IGC. The bureaucratic nature of decision-making makes change very difficult. The report is right to call for a more transparent system to determine whether high access charges can be justified, taking into account the fact that Eurotunnel is solely reliant on access charges for its income, and to deal with its historic debt. Of course, it gets no public subsidy. A more transparent system would give clarity about how charges are allocated between users, which is crucial given Eurotunnel's role as both an infrastructure provider and operator. It may be that independent regulation is the answer.
	Yesterday's press carried reports of the ruling by a French commercial tribunal that approved Eurotunnel's purchase of three ferries from the liquidated Sea France ferry company. Eurotunnel will continue to employ the 560 former workers and run the services. This may be welcome for the workers, but it adds another layer of complexity to the nature of the charging and competition regime. I would not be surprised if the EU competition authorities did not take an interest.
	Like the noble Baroness, I am very concerned about the insistence that the tunnel maintain its own safety standards rather than the EU-wide TSIs. This is being used as a barrier to new entrants to the market, and I would like to see more evidence that after all this time the tunnel requires bespoke standards. The comparison with tunnels elsewhere is valid. My noble friend Lord Fearn recently received a Written Answer that stated that there were 64 accidents in the Channel Tunnel last year. Will the Minister say how this compares with tunnels elsewhere, and what it says about the operation of separate standards?
	I was persuaded by the evidence that the so-called juxtaposed border controls should be looked at again in terms of the time and cost of operating them to both passengers and rail operators. The feasibility of on-board passenger and passport checks is an advantage that rail has over air which ought not to be lost. I am pleased to see that the Home Office, at least, looks open to it.
	I have looked at this issue from the point of view of modal shift-there are many dimensions to it- and I look forward to the contributions of other noble Lords, although I can see that this will be one of those debates in which there is a huge amount of agreement.

Lord Freeman: My Lords, in common with those noble Lords who have already spoken, I warmly welcome the report. It is a good example of how your Lordships' House can perform a real service in comparison with the other place. Here, we have a process of thorough examination on an all-party basis-often not on a partisan basis; the Government then respond and then there is a debate. There is no similar process in the other place.
	The committee will welcome the attention to detail of the noble Baroness, Lady Scott, and I am sure that she will add a great deal to the work of the European Union Committee.
	I particularly welcome the report because it is clear, extensive and comprehensive and has enabled the Government to respond fully and clearly. I add my thanks and congratulations to my noble friend Lady O'Cathain; she has done a marvellous job. I think that many noble Lords who are not in their places today and who do not serve on Select Committees do not fully appreciate the amount of work that a chairman, in particular, puts in. I congratulate her on behalf of my colleagues and, I am sure, on behalf of the whole House.
	I pay tribute also to my noble friend Lord Roper. He is no longer chairman of the full committee but he performed a Herculean task with good grace, courtesy and thoroughness. We should not forget that a sub-committee reports to the main committee. The main committee then goes through its report with a fine-toothed comb and sometimes improves it. The whole House owes a great deal of gratitude to my noble friend Lord Roper.
	I shall not repeat or comment on any of the excellent points already made. However, I note that three former colleagues of mine on European Sub-Committee B are in their places. They will be speaking in the debate and I look forward to their contributions. I shall focus on the passenger rail part of the report and also on the Channel Tunnel.
	On a lighter note, I notice in the report that some evidence was taken from a frequent traveller-The Man in Seat Sixty-One-of Eurostar. I have to say that that is my favourite seat. I hope that it was not me, because I have now completed more than 100 journeys on Eurostar in the past 10 years.
	My first point relates to capacity. I am somewhat sceptical of the comment in the report-I think that it comes from Her Majesty's Government-that the tunnel is being used at only 50% of its capacity. I am not wholly convinced by that, because if there is to be a better, more frequent service for the passenger, as opposed to freight-and obviously that will also happen during the course of the day-we should not assume that there is a relatively infinite amount of capacity available. I am not asking the Minister to respond to that point; I am merely pointing out that there are limitations. Once you get an electrical fault or a train running slowly through the tunnel, traffic quickly backs up. I also believe strongly in keeping the fast Channel Tunnel service at two hours and 15 minutes from London St Pancras to Gare du Nord. That is a real prize and we are seeing more and more passengers, particularly business people, switching from short-haul air services to Eurostar.
	My second point concerns Waterloo, which looks like a white elephant at the moment. Is it likely to be available for additional passenger services coming through the tunnel? I do not know what the long-term plans are so far as British Rail is concerned, but it is an asset which has remained empty for far too long. The reason for switching from Waterloo to St Pancras was the enthusiasm of my noble friends Lord Heseltine and Lord MacGregor for the possibility of linking into a through service to the Midlands and the north of England. Practically that is not possible at the moment, because you have to get off the train at St Pancras and catch a normal Intercity train. I will not ask the Minister to comment because it is a detailed operational point, but it could be a prize.
	Like others present in the Chamber, I have suffered from long delays-particularly, it has to be said, at Gare du Nord. We should look carefully at ways of speeding up the process of looking at passports and, if necessary, examining luggage on the train. The police and the authorities have ample opportunity to detain anyone who does not have the correct papers.
	I have two final points, although the Minister does not necessarily have to respond to them today, but perhaps he will be kind enough to do so in writing. First, I shall quote from the Government response to the report:
	"We are currently considering with France"-
	that means the French authorities-
	"the most effective way of implementing the EU Interoperability directive in relation to the Channel Tunnel".
	Have events moved on and what is the present status? Secondly, is there any more up to date information on the proposed Deutsche Bahn passenger service, which I think we would all welcome? I am not clear as to why there is a delay on the part of the German railway authorities and Government in pursuing negotiations for access.
	I conclude by taking this opportunity to thank our officials. It is quite rare to do so-certainly it is extremely rare in the other place. But we should be very conscious of the excellent work performed for all the sub-committees, and particularly the main committee, by civil servants. I would be grateful if my noble friend would communicate my thanks.

Lord Haskel: My Lords, serving on one of your Lordships' committees is a wonderful way of getting to know your fellow Peers. The depth of knowledge and experience never ceases to amaze me. The noble Baroness, Lady O'Cathain, mentioned the noble Lord, Lord Bradshaw. He really is a walking database on railways. He and my noble friend Lord Berkeley used to be walking encyclopaedias, but of course they do not exist any more. It was a pleasure to serve with my noble friend and everyone else.
	Our chair, the noble Baroness, Lady O'Cathain, has a special concern for the consumer, something that no doubt she learnt during her business career. It is that concern about the well-being of the railway traveller moving across European frontiers that is central to this report. An interest that we all share is to promote the environmental friendliness of rail travel. For my part, I find it more convenient and pleasant to travel by rail than by car or aeroplane.
	We were very fortunate to have John Turner and Michael Torrance, and then Mark Davies, as our clerks and policy advisers. They were towers of strength and I thank them.
	The conclusion of our report has been reflected in what a number of other noble Lords have said. A lot more can be done to make cross-border rail travel in Europe easier, quicker, cheaper and more convenient. What is required is a much greater sense of urgency and priority-in Whitehall as much as in Brussels. The framework is there, the talking goes on, but the action is slow. For instance, the principles are agreed but member states are not implementing the railway packages equally. For this to happen, the European Railway Agency needs to be a lot more effective. All this discriminates against new access to the rail infrastructure by creating technical and administrative barriers, which vary from nation state to nation state. This is what creates the barrier to international operations.
	A recast of the first railway package designed to establish a single European railway area is being discussed. The UK National Parliament Office in Brussels reports that a fourth railway package has been drafted to make things even better, but it all depends on the agreement to be reached on the recast of the first railway package. In their response to our report, the Government are obviously as frustrated as we are that the Commission is not using its powers to enforce the first railway package. Have the European Commission and the European Parliament taken any further action to enforce this package? We were told that they were due to debate this.
	The Independent Regulators Group seems to be working. In their response, the Government tell us that the group has a full programme of monitoring of work and developments. If I may say so, it at least is travelling in the right direction. The work is due to be completed this year. Can the Minister tell us how it is going?
	It is right to ask why this is important. What is there to be gained? The answer lies in figure 3 on page 35 of our report: the core network map for 2030. According to this map, by then we will be connected to an impressive rail network throughout the European Union. If it is efficient, united and convenient, it will provide a service that will attract the consumer, help the single market and help cut fuel emissions.
	As my noble friend Lord Faulkner explained, our connection to this network is through the Channel Tunnel, and this connection is crucial. The impression that we got from the witnesses was that the tunnel is not working well. First, our graph in figure 2 on page 28 shows that the number of passengers is levelling off. Incidentally, the volume of freight is decreasing, which is very worrying.
	As other noble Lords have said, we were surprised to learn that there is unused capacity through the tunnel. My noble friend Lady O'Cathain gave us the numbers. The noble Lord, Lord Freeman, doubts this but the evidence we had from our witnesses was pretty definite: there could be a lot more passenger trains going direct to other cities in Europe apart from Paris and Brussels. Yes, a service to Germany is planned, but the start seems to be getting later and later. They are now talking about 2015.
	Since our report was published, Eurostar announced that it was "eyeing"-whatever that means-adding up to 10 new routes from St Pancras to Holland, Germany, southern France and Switzerland. This is because with HS1 you can actually save time compared with flying when travelling from city centre to city centre. But it is talking about 2016 or even 2017, even though HS1 has now been operational for two years. This has come about through competition. It will only happen because Eurostar is going to lose its monopoly on high-speed services through the Channel Tunnel. Even so, I am sure that noble Lords will agree that this is disappointingly slow.
	Are there any other reasons why this extra capacity is not in use already? The noble Baroness, Lady O'Cathain, gave us several answers. I agree with her that the impression that we were given is that access charges are high and unpredictable. My noble friend Lord Faulkner put the figure at £12,000 from some briefing that came from Eurostar, but I share with the noble Baroness, Lady Scott, the impression that they are unpredictable. As we say in our report, new entrants will be deterred if the access charges are not fair, predictable and readily available.
	In their wonderfully bureaucratic response to the question of access charges, the Government recommend caution because of the complexity of making pricing judgments. All I can say is that other regulators make pricing judgments every day of the week, in water, electricity, gas and even within UK railway travel, so why not with the Channel Tunnel? This must be a major factor in the underutilisation of the tunnel and the lack of competition.
	Other noble Lords have mentioned border controls. It is a question not only of immigration but of terrorism, both of which are important factors. Integral with this is the right to cabotage, which would help generate more demand and make international services profitable. Perhaps the Minister can say whether anything is happening about this.
	Witnesses told us that interoperability is a major factor. The European Rail Agency really has to be more proactive in this area. The Government in their response agree, saying that the European Rail Agency's work on interoperability is planned to conclude in summer 2012. Well, the calendar, if not the weather, tell us that it is now the summer. What is happening?
	Ticketing is another barrier. You just cannot buy a through-ticket from one European railway station to another. That is understandable if it is from one minor station to another, but it applies also to tickets from one major terminus to another. You still have to buy different tickets for different parts of the journey and, of course, there is no consistency in price. Booking cross-border tickets on the internet is virtually impossible. We heard some wonderful evidence from the man from the website The Man in Seat Sixty-One, who explained the intricacies-his evidence also impressed the noble Baroness, Lady Scott-and he works full time advising people on how to book tickets across Europe, particularly on the internet. He makes a living out of it.
	Passengers' rights also need to be clarified, even though, as the Government point out in their response, passengers on international rail journeys within the EU are covered by specific conditions. However, it is still unclear what happens if you miss a connection because your train is late and the ticket price is different on the next train.
	We have been assured that all these problems-and others which I have not mentioned but other noble Lords have-are being tackled by the intergovernmental committee which operates through the treaty of Canterbury, and that consumers' concerns are paramount. However, I repeat that my impression, like that of other noble Lords, is that the whole thing must be speeded up. It is slow because there is little competition both through the Channel Tunnel and across international borders; it is slow because officials, by definition, are too distant from the consumer.
	If the Government can find more ways of introducing competition, there will be a much greater sense of urgency initiated by the operating companies. Then we will all benefit from a fast and efficient passenger railway system across Europe that is both consumer-friendly and environmentally friendly. The potential is there; the framework is there; it just requires the effort.

Lord Berkeley: My Lords, first, I declare an interest as chairman of the Rail Freight Group and a board member of the European Rail Freight Association. I spent 15 years in my comparative youth building the Channel Tunnel, and I recall having many debates with the noble Lord, Lord Freeman, who was one of the best Transport Ministers I can remember. We dealt with a lot of local problems and, sometimes, national problems. It was a pleasure to work with him and is great to see him in his place today, because he started many of the things that we have today.
	I am sorry that I was not involved with the forecasting, which many noble Lords have criticised, or negotiating the contracts, which I am about to criticise, but there we are. We have had one of the best informed debates I can remember. There is remarkable expertise in this House and remarkable unanimity of view, which we can probably sum up as saying: it is time that the Government got moving on this to make the changes that this excellent report has recommended. I support everything that is in it. Of course, I gave evidence as well.
	I have just one issue on capacity before I get into structure, which is my main subject. The noble Lord, Lord Freeman, will remember lots of debate about capacity through the tunnel, but capacity in a line such as this depends on all the trains going at the same speed. The original capacity design was 24 paths an hour in each direction which, if the signalling was upgraded, could be increased to 30. You could not run 30 trains, but you could run with a few spaces. The noble Lord will probably remember that Eurotunnel announced a few weeks ago that it will speed up the shuttle trains to keep up to the same speed as the Eurostar to get more trains through the tunnel during the Olympics. There is plenty of capacity there and I agree with the noble Baroness, Lady O'Cathain, that very little of it is being used for the through services.
	Another issue is immigration. I shall not speak about that for very long, because I said quite a lot about that during the Second Reading debate on the Crime and Courts Bill, and the noble Lord, Lord Henley, has agreed to meet me before Committee on Part 3. I sense that other noble Lords may wish to participate in such a meeting, and I shall be in touch, because I agree that the current situation is absolute chaos and, frankly, an insult to visitors coming to this country.
	The report rightly states that the Channel Tunnel should be seen as part of the European rail infrastructure. As many noble Lords have said, it is good for economic and cost reasons that the tunnel should not be seen as a barrier to traffic and trade. There is a long way to go before that is achieved both in the tunnel and across Europe. The noble Baroness, Lady O'Cathain, rightly talked about fragmentation.
	I shall speak primarily about the structure, which I think is blocking change at the moment. The first railway package, completed in 2001, set a structure and regulatory changes to make the European railways more competitive, cost-effective and interoperable. Thirteen member states are currently being infracted against by the Commission for non-compliance with legislation that they agreed to in 2001, which is incredible. They include the big ones: Germany, France-my noble friend Lord Faulkner referred to the problems in France; he is absolutely right-and Italy.
	I was interested in the evidence to the committee from the Italian railways, who said with one breath that the freight in Italy has been liberalised and everything is fine and that the next thing will be international passenger transport, but in fact-this is happening in France as well-they are complaining bitterly about what is happening in other countries but making very sure that no competition can happen in theirs. As just one example, the Italian Government and the incumbent railway, FS, are trying to prevent other operators getting access to tracks and terminals. It is encouraging its Government to introduce rules saying that all operators must provide mobile rescue cranes every 500 miles-not one set of cranes around the country but each operator having to have his own set of cranes. This is of course because the incumbent has a lot of old cranes and nobody else has. Every train will have to have two drivers, because the FS ones have two, but nobody else needs them-the passenger ones do not- while no leased wagons may be used. They introduced this legislation at zero notice, so in theory if the independent operators were running a train on the main line with leased wagons, they would have had to put the brakes on, stop and block everything. This has been going on for the past two years, while the Italian authorities and the chairman of Italian railways go around Europe saying, "We are fully liberalised". They are not.
	Where does the Channel Tunnel come into all this and does it comply with the first railway package? The committee thought not but the government response said that it does. In paragraph 135 of the response to the report, the Government say:
	"The UK complies with the First Railway Package in full"-
	in full-
	"both in respect of the domestic network and the Channel Tunnel".
	Well, they do on the domestic network but the Commission does not think that they are on the Channel Tunnel, because it started infraction proceedings against the UK and France in February 2011. It is odd that the government response did not mention this. When the Commission is infracting a member state, surely it is relevant to the Government's response to a report. I have all the papers; I could have had a few more, except that they rejected my freedom of information requests, but I have quite a few. The first concerns the subjects of the infraction. I shall summarise them because they are rather long but they are important.
	The first concern is on the "independence of essential functions", which means that the infrastructure manager is not owned by the same company as the train operator because that operator otherwise gets preferential treatment, as happened in Italy. The second is that there should be separate accounts for infrastructure managers and operations and that has not happened, according to the Commission. The third is on rail access charges, which a number of noble Lords have mentioned and to which I shall come back because they are very high. The fourth is on an independent regulatory body. Until about now, it has not been independent because the regulator has been part of the Department for Transport, which owns parts of Eurostar. Our Government need to be congratulated because they are now moving the whole of the UK side of the intergovernmental commission to the Office of Rail Regulation-but of course the French Government have not done that yet. Finally, there is the issue of "capacity allocation", which is again not independent. The Commission's paper is called an EU pilot and it is digging very hard into the detail. I would be very interested to know from the Minister whether the Government are resisting any requests for information from the Commission or are being proactive in response. Similarly, do the Government accept that the first railway package applies in full to the Channel Tunnel?
	Turning to the access charges which other noble Lords have mentioned, article 8 of directive 2001/14 is the relevant one. I was a little disappointed with the committee's response. It seemed to think that because Eurotunnel is in the private sector it should be able to,
	"set access charges at a market rate subject to their obligations under EU law".
	That is right; it should be able to set its charges under those obligations, which I will come to, but I would submit that its being in the private sector is not particularly relevant. In their response on Eurotunnel, however, the Government say in paragraph 140:
	"EU legal requirements have been fully implemented".
	I would challenge that.
	Other noble Lords have spoken about the charges, but there is more to it than that. If we look at the five issues the Commission has put in the pilot, Eurotunnel has not demonstrated that its infrastructure management is sufficiently separate from its freight operation, its passenger operation or from the freight and passenger shuttles. The shuttles are exempt from the legislation, but they have to be looked at separately. There is no separation of accounts. There is some progress in the network statement, but not enough. I have mentioned the regulatory body and that the access charges are too high, so basically the UK gets one out of five and France gets nought out of five, which is a pretty poor record 11 years after the first railway package came into effect.
	I do not accept the committee's view that access charges should come down in the medium term. There is much more to it than that. Several noble Lords quoted the charges. I shall quote some in a slightly different way. The charge per train kilometre for a Eurostar is £36 on HS1, £13 on the high-speed line in France and £225 on the Channel Tunnel. In the tunnel, it averages about 10 times the charge on the other side. For freight, the evidence that MDS Transmodal submitted to the committee was that the charge is about £3,000 a train-it varies quite a lot. It argued that it should be £1,000 to attract significantly more traffic, bearing in mind that there are about five freight trains a day going through at the moment. If you stand on the M20 at Ashford and count the number of trucks, you could fill 200 trains a day. I suggest that there is something wrong there.
	How is the charge arrived at? This is the problem. There is a rail usage contract that dates back 1985. The noble Lord, Lord Freeman, may even remember it. It was designed to give a government guarantee to Eurotunnel from the two railways: British Rail and SNCF. The charges were based on full cost recovery-fine-fixed costs and variable costs plus a mark up. The problem is that the two companies that signed, which are now DB Schenker and Eurostar, pay the charges on the basis of the rail usage contract, which has now been turned into a network statement. If anybody else comes along, like Deutsche Bahn, it will be paying the same amount, but will also be paying a charge that reflects the fixed costs of the tunnel. Something in me says that Eurotunnel is going to get the fixed costs paid twice. That does not seem right. The whole thing is a complete mess and it needs completely restructuring on the lines of article 8 of directive 2001/14. There is a marginal cost, a fixed cost and an allowance for financing with a calculation of how much the market can bear, all supervised by the regulator, which is a joint regulator independent of government. I can go on about fixed costs and fire suppression, but I think that, in interests of time, I had better not.
	What we have here is a wasted asset for passengers and freight that is, after all, the mode of transport supported by the Commission, the UK Government and, no doubt, the French Government. The committee recommended root and branch restructuring of the Channel Tunnel. The noble Baroness, Lady O'Cathain, referred to that. The noble Baroness, Lady Scott, talked about competition. She is absolutely right. We all believe in fair and transparent competition. This is what Sir Roy McNulty is saying about the UK, and it is no different. If you want growth, you need competition, but any competition to make it work must be fair and transparent. I hope that the Government will set an example to all the other member states that are failing and take this forward, take on the recommendations of the committee and let us see some urgent change.

Lord Walpole: Oh dear. All I can say is: how do I follow that? That is the expert. I will try. My family were Members of Parliament for Kings Lynn on and off since about 1350 until the end of the 19th century. I wondered what they felt about the possibility of a Channel tunnel, and indeed I know perfectly well what they thought: they preferred to use the Hanseatic League and did not want somewhere for the French to be able to march over to Dover.
	The report and the Government's response to it are an invaluable record of the position on 8 December 2011. That is my birthday. It is also the day of the Immaculate Conception. I do not know whether noble Lords ought to draw a line between the two. The noble Lord, Lord Berkeley, did not mention immaculate conception, did he? No.

Lord Berkeley: I did not draw a line, either.

Lord Walpole: Over certain distances, there is no doubt that the train should be better than the air. It should be cheaper, should be better for the environment, should be better for time and should be more comfortable, though whether or not that is true, I do not know. The report in front of your Lordships contains, in box 2, the treaty of Canterbury. Whatever anyone has said so far, after 25 years that treaty is out of date and should be looked at very carefully. I think that someone has already drawn attention to the fact that on page 28 there are unimpressive figures for passengers and freight; certainly those for freight are totally unimpressive.
	On page 35 there is the core network map of what the railway is going to look like in 2030. Once again, there is no route to East Anglia or the West Country, nor any route to Scotland north of Edinburgh. Has anyone heard of Swindon, Bristol, Truro, Harwich or Felixstowe? None of those will be on decent railway lines. The present capacity, shown in paragraph 74 on page 29, of less than 50% of the amount of passengers that could be taken and less than 10% of the freight, is quite extraordinary. Perhaps it is too expensive per train per kilometre.
	In our village at home, there is a gentleman, now retired, who owns his own articulated lorry and spent his life going all over Europe picking up trailers and bringing them back. He said that without doubt he would rather go on the ferry than through the tunnel. Why? Because it was easier to get on the ferry-not that there is any difficulty getting on to the train, but you then go and sit in some nasty little carriage up at the front, and a few moments later you arrive in France. If you go on a ferry you can have a nice little relax, you can fill your-you know what I mean.

Lord Berkeley: Flask.

Lord Walpole: Yes. You can get everything right. I like railways and I like the tunnel, but if you go from Norwich to Liverpool Street, you go to a place called Stratford. You cannot change at Stratford on to anything else; you have to get a train either to Ebbsfleet or to St Pancras. That is extraordinary. I should think that I have used the tunnel about four to five times a year-in other words, eight to 10 journeys a year-ever since it started, both by car and by Eurostar, and I must say that I have always enjoyed it because one has got the hang of how to enjoy it.
	Through ticketing simply must be introduced. When my ancestor was 200 and I was 60 in the same year on the same day, we decided that we would go to The Hague. How many tickets did we need for that? Well, you work it out. We started on Eurostar and ended up on some Dutch train, which was superb-but, yes, we will not go into that.
	Now, finally, I say thank you very much to the noble Baroness, Lady O'Cathain, for being a very good chairman, bullying us all, making us speak, and helping us very much indeed. I also say thanks to our clerk and to Elaine Morgan, who were 100% behind the committee. We could not have acted without them.

Lord Brooke of Alverthorpe: My Lords, I commence by thanking the noble Baroness, Lady O'Cathain, for keeping us on the rails all the way through this exercise, and keeping us pointed in the right direction in a non-bullying way. I thank, too, our clerks, who gave us such great assistance during the course of the committee, and I particularly thank colleagues who have left the committee since we concluded the report, as well as the new ones who have joined us. I also express my gratitude to all the people who provided evidence to us, both orally and in writing, which was very useful indeed.
	It is some months, of course, since we concluded the exercise, the report appeared and we got the Government's response. It is quite interesting to see what has happened in the mean time. I have gone back and reread our report and the Government's response, and I have also picked up on one or two things on the internet that have happened. I see, first, that there has been quite a major breakdown-a health and safety issue in April in the tunnel. Secondly, immigration, a topic which we touched on, has moved up the agenda significantly since we addressed the issue last year. I think we found that, in retrospect, the Minister's response at that time was somewhat complacent. She said that we will have sorted it out by the time that we get round to Deutsche Bahn extending the run through to Amsterdam and into Cologne; whereas the reality is that, as has now been indentified, many people have been using the existing train system under current arrangements to come into the country illegally. This needs to be addressed with urgency from a variety of standpoints, as we have already heard.

Lord Berkeley: Is the noble Lord aware that Deutsche Bahn has said that it is not going to go ahead with its service until the immigration situation is sorted out?

Lord Brooke of Alverthorpe: I was not aware of that, my Lords, but it is a very important and significant point indeed. This will presumably be quite an obstacle to making progress and introducing the new extended lines for which many noble Lords have been calling.
	More recently, and thirdly, we have seen the announcement-the noble Baroness, Lady Scott, mentioned it, and I think that my noble friend Lord Berkley may have said more on it-about allowing Eurotunnel to take over SeaFrance's cross-channel vessels. This takeover occurred within a matter of days and raises, as the Financial Timessays, significant implications for competition and, in turn, charges, which I will come back to in a moment. My major point is about the charges.
	Fourthly-and this is good news-I see that the number of foot passengers travelling through the tunnel over the past few weeks has increased significantly, largely because of people wanting to come and participate in the Jubilee celebrations. All those of us who want this to be a successful venture will hope that that will continue into the Olympics and beyond. Those are the changes that have occurred since we concluded our report.
	In two years, a major celebration will take place. In 2014 we will celebrate 20 years since the Channel Tunnel first opened and all the worthy work that my noble friend Lord Berkeley did on its construction. It was a truly amazing event when the tunnel opened. It was a great venture, a great vision and the fulfilment of the marvellous technical expertise that went into it. However, regrettably, as others have said, as yet we have failed completely to deliver the fulfilment of that vision. This came from the evidence of the people who came before the committee. They were almost unanimous in saying that the tunnel has not delivered all that was hoped of it and that there is still a long way to go, even though it is such an amazing piece of infrastructure that is capable of delivering such public good, not just for the UK and France but over a much wider front throughout Europe.
	The witnesses-even those from Eurotunnel, with their projections-were also unanimous in saying that we still do not have enough foot passengers travelling on the train and we are well short of how much rail freight there should be. The figures are very low indeed in comparison with the original projections. Indeed, as my noble friend Lord Haskel pointed out, they have been falling off in recent years, which is of great concern. Interestingly, our witnesses all felt that this was not good enough. They all felt that we should be trying harder and going for growth. I was very pleased that the noble Baroness, Lady O'Cathain, introduced the debate by pointing to the importance of growth in this context, both for this country and for Europe.
	Our report endeavours to be constructive, to identify the areas in which performance has been falling down and to suggest a significant number of solutions to the problems. I regret that the Government's response was not as positive as it might have been. I rather sensed that our chairman felt the same. Their response did not have the enthusiasm and energy that the committee showed in addressing the topic. This came through both in the public performance of Ministers and their supporters when they came before us and in the written document. No doubt the noble Earl, Lord Attlee, may put me right on that when he responds in his usual way.
	I found it quite surprising that, when we took evidence from the Minister, she encouraged us by saying that our report would provide a push in the right direction. That hardly indicates a strong commitment. I hope that we will get some movement on this over the next two years, so that when we get to 2014 we will have seen some substantial changes.
	In fairness to the Government, perhaps in retrospect we should have invited the Mayor of London to give evidence. He would have talked about growth, London and the importance of getting jobs for London. We would have pointed out to him that the Channel Tunnel has an important part to play in such growth. Had we persuaded him that it was an issue on which he should campaign, we might have made more progress with the Government, given the unusual way in which he can bring pressure to bear on them. Maybe that is something for us to bear in mind in future.
	I come back to the importance of the report. The Government have made some progress in addressing the governance of the IGC. This has been slow but at least the introduction of representatives from the Office of Rail Regulation, and the enhanced role that is envisaged for them in future, is a step in the right direction and very positive. I was certainly very impressed by the evidence that we heard from those representatives who are now on the IGC. They identified areas in which questions were raised about the performance of Eurotunnel. Mr Kogan, in particular, asked whether Eurotunnel's charges were justifiably high or inexcusably high. I believe that that is at the heart of the whole issue of whether we move forward with the tunnel. He also raised questions about the absence of a performance regime for Eurotunnel. In the UK, any company of that size that did not have a performance regime in place would be severely criticised. Again, this is an area where Eurotunnel needs to move forward and ensure that it is open and clean about where it is going. Mr Kogan told us that the IGC had been working on some of these issues for two years. As he appeared before the committee last October, now it is close to three years.
	I have looked at the latest reports on the internet. The last report that the IGC produced related only to 2010 and did not appear until September 2011. We are still waiting for the report on 2011. In particular, I will leave the Minister with a question which he might not be able to answer today. The Government's response to paragraph 141 states:
	"The IGC is currently investigating the level and appropriateness of Eurotunnel's charges and its Joint Economic Committee published a report on the first phase of its work in October 2011. Further work is underway but will take some time because of the complexity of Eurotunnel's accounting structures and financial flows. Until those investigations are concluded, and on the basis of the evidence currently available, we would recommend caution in assessing whether the level of the charges is appropriate".
	I have looked at the website but can find nothing about what is happening on that front. I have done some research elsewhere to find out what is happening. It is now close to three years since this work was first put in place. If the Minister cannot reply today, will he please reply to the committee in writing and tell us when we can expect that research to be concluded so that we can see it? On that basis, I believe that we will have a foundation on which we can move forward profitably.

Lord Davies of Oldham: My Lords, first, I congratulate the noble Baroness, Lady O'Cathain, the chairman of the committee, on this report and acknowledge the enormous amount of work she has been involved in in producing this significant document. Proof of the success of this work is the extent to which she has been backed by noble Lords from her committee who have made such telling contributions today. I shall refer to those in detail in a moment.
	Ordinarily, these debates tend to revolve around the participation of committee members as they see the conclusion of their work and want to see the Government's response. The distinguishing feature of this debate is that there also have been contributions from noble Lords who are not members of the committee but who have made significant points which I hope the Minister has taken on board. In my short contribution, I want to dwell on one or two of those points in order to clarify the issues for the Minister and, therefore, aid him in his response to the committee's proposals.
	If I have one criticism of the report, it is probably in its title. It looks more like a statement of aspiration than a potential achievement. The report identifies two things. The first is that completion is a long way away when we do not have full implementation of the first stage with regard to the Commission. Secondly, it concentrates on the specific British dimension of this work-the Channel Tunnel-and is far from satisfied with the present arrangements as regards that significant enterprise. Of course, we all engage with the committee in its broad objective. There is a huge advantage and benefit for the country if we can extend cross-border rail travel. In terms of travellers' convenience and the broad environmental issues, we all know the potential advantages of rail over aircraft. That underpins the aspiration behind the report.
	The Minister will recognise that committee members identified that the government response is somewhat lacklustre. It is particularly lacklustre on the most trenchant part of the committee's report, in paragraph 136, which says:
	"In the long-term, we support direct governance of the Channel Tunnel by the UK and French national regulators".
	That is the objective for our part of completing a dimension of our contribution to the single market. I should be grateful if the Minister would address himself to those points, although whether he accepts that the treaty of Canterbury can be revised in such a dramatic form is an interesting question.
	What has been identified in the debate are the frustrations born of the existing structure for the Channel Tunnel, to which my noble friend Lord Faulkner referred, along with the noble Baroness, Lady Scott, in mentioning the issue of access charges, and my noble friend Lord Berkeley with his particular expertise, in discussing the direct operations of the Channel Tunnel.
	The other dimension also needs to be taken fully on board. It was my noble friend Lord Faulkner who dwelt most significantly on these matters. I refer to how limited the development of the single market is in so many countries in Europe, even those with railway systems that we all applaud. We should approach the European position with a little degree of modesty. After all, there are some excellent rail systems in Europe, and it is the case that the British system compares ill in some crucial aspects. On the one highly significant feature-the report demonstrates that the concern is about the customer-the passenger in Britain pays 30% higher fares than in many European rail systems. So we ought not to think that we can easily lecture other systems on improvement in circumstances where our own house is not entirely in order. It is very likely that we will be discussing these issues against the backdrop of ever-increasing fares in the British system.
	There is one other dimension on which the Minister will need to tread with some degree of care. Of course, we all recognise the necessary emphasis in Britain on border controls to preserve the protection of the public, but it is also the case that the border controls at present work in such a way as to produce the maximum irksomeness for the average passenger without, from what one can see, very significantly enhancing the security dimension.
	These are factors that should concern us. Tribute has already been paid to the noble Lord, Lord Roper, with regard to the European Union Committee over many years. From that work, we know that the reports of this House are taken serious in Brussels. But on rail we will need to force the issue in a very sharp way indeed as it is clear that there is an awful backlog to catch up. We must expect a more positive response from Europe, but that above all means that we must have government support and a government initiative that is clear on its objectives and determined to ensure that, even if we cannot complete the European rail market in the immediate future, we can take many more significant strides than we have done in recent years.

Earl Attlee: My Lords, I start by congratulating the committee, which was so ably chaired by my noble friend Lady O'Cathain. The Government welcome the sub-committee's thorough report on the European rail market and the role of the Channel Tunnel and have provided a full response. As ever, I am on a strict timetable.
	We believe that a truly open, fair and liberalised market would increase competition in international passenger services across the EU. We support the Commission's overall aim of clarifying and strengthening the regulatory framework for rail access through the first railway package recast. In particular, we endorse the need to ensure that there are adequately resourced and properly independent regulatory bodies in order to facilitate market entry and competition.
	The Government recognise that the Channel Tunnel is a unique piece of international transport infrastructure and that it is in the country's interests that it remains in operation. By virtue of the 1986 treaty of Canterbury and the ensuing concession agreement, the Government are directly concerned with the Channel Tunnel.
	The UK strongly supports the growth of cross-Channel rail services. The provision of international services and their service patterns is a commercial matter for operators. In order for a train to transit the Channel Tunnel, the operator needs to comply with the relevant European, national and Channel Tunnel-specific requirements.
	My noble friend Lady O'Cathain and other noble Lords talked about the proposed Deutsche Bahn service. DB applied to the intergovernmental commission in October 2011 to amend its Part B safety certificate, which covers management of safety issues, to include operation of passenger services through the tunnel. Since the intergovernmental commission has been unable to reach a decision, the application has now been referred to the British and French Governments for consideration. That process is ongoing. Deutsche Bahn will also need to obtain an interoperability authorisation to place its new trains into service in the tunnel. Although IGC officials from the UK and France have been working positively with Deutsche Bahn and Siemens to help them prepare the necessary dossier, as yet no formal submission for authorisation of new rolling stock has been made to the IGC by either Deutsche Bahn or Siemens.
	The noble Lord, Lord Brooke of Alverthorpe, and, I think, another noble Lord asked me about the purchase of SeaFrance Ferries. It is a matter for the competition authorities, either DG Competition at the EU or the Office of Fair Trading, to determine whether any change in market dominance raises competition issues. The noble Lord, Lord Brooke, also asked about the 2011 report of the IGC. I do not expect inspiration to arrive and therefore I will have to write to the noble Lord.
	My noble friend Lady Scott of Needham Market talked about modal shift for passenger and freight. We recognise that modal shift from air and road to rail can generate important environmental and congestion benefits. However, rather than trying to force people away from car or air travel, we are working to support sustainable travel choices. A number of barriers can prevent behaviour change, including powerful ones such as habit.
	Studies have indeed indicated that the Channel Tunnel has spare capacity to accommodate growth. Although there have been indications that the rail freight share of the cross-Channel market would be higher if rates were lower, pricing judgments are inevitably subjective and it is always difficult to make accurate volume and revenue forecasts. However, in partial answer to the question from my noble friend Lord Freeman, there is spare capacity for growth, as about 50% of capacity is being used at the moment.
	The noble Lord, Lord Faulkner of Worcester, suggested that access charges for Eurotunnel are too high, and other noble Lords said as much. We have no clear evidence that Eurotunnel's charges are inappropriate. However, the IGC is currently investigating the level and appropriateness of Eurotunnel's charges, and its joint economic committee published a report on the first phase of its work in October 2011. Further work is under way but will take some time. Until those investigations are concluded, and on the basis of the evidence currently available, we would recommend caution in assessing whether the level of charges is appropriate.
	In answer to another question from the noble Lord, Lord Faulkner of Worcester, the Government support long-distance high-speed rail. At present, services on HS1 and the Channel Tunnel are relatively inaccessible for those outside London and the south-east. By providing direct access to the wider European network for services from Manchester, Birmingham and other cities, a link between a national high-speed rail network and the current HS1 could address this. In January this year, the Government announced that phase 1 of the HS2 network will include a direct link to the continent via the HS1 line to the Channel Tunnel. The Government's view is that the strategic case for a direct link between the proposed high-speed rail network and the HS1 line to the Channel Tunnel is strong.
	My noble friend Lord Freeman asked about the Waterloo International terminal. I had been briefed on this but, sadly, some time ago. My noble friend will recall that the connection to HS1 was slow, and there are also technical issues regarding bringing the platforms into domestic service.
	I should like to say a few words about the role of the Channel Tunnel Intergovernmental Commission and the IGC legal framework and governance. The governance structure for the Channel Tunnel has been sufficiently flexible to accommodate subsequent developments in European, UK and French law and regulation, and it is expected to continue to be so. The Channel Tunnel Intergovernmental Commission and the Channel Tunnel Safety Authority are currently seen as providing an effective structure for regulating the Channel Tunnel in line with the European framework. If a need is identified to improve the effectiveness of the IGC or to adjust the powers available to it as regulator, the Government will promote any necessary legislative changes.
	The speed of IGC decision-making is conditioned in part by EU regulatory processes and requirements and by the processes and responses of the concessionaires and other stakeholders. The IGC process with regard to the authorisation of proposed new services through the tunnel cannot start until the relevant documents have been submitted.
	I think that I will have to part company with my noble friend Lady O'Cathain and the rest of the committee at Canterbury. The Channel Tunnel is a binational infrastructure and therefore needs some form of binational governance. This is necessary regardless of which authorities have, in law, the regulatory functions. Even when the IGC is exercising legal powers in its own name, its decisions are, in practice, informed by discussions between the French and British national authorities. In this connection, we are working with our French colleagues to conclude as soon as possible transposition of the revised railway safety and recast railway interoperability directives for the Channel Tunnel. We see no need to renegotiate the treaty, and I suspect that the French have no appetite to do so either, as observed by my noble friend Lady O'Cathain. The noble Lord, Lord Davies of Oldham, referred to the treaty and to direct governance of the tunnel but I do not think I heard him say what the policy of Her Majesty's Opposition is.
	I turn to the tunnel-specific safety rules for passengers and freight. The IGC has made significant progress in reviewing its rules to check that all the safety requirements currently in place continue to be justifiable on safety grounds and to remove those which are not. The IGC will continue to hold this view unless the evidence demonstrates otherwise.
	The tunnel authorities and Eurotunnel are working together to address the consequences for the tunnel's rules of the opening of the European rail market. This includes a programme of work to address the European Rail Agency technical opinion, which has already led to a number of requirements being removed. The UK Government accept the principle that the IGC must justify, by robust risk analysis, any requirements that are additional to the European harmonised technical specifications for interoperability.
	The safety concerns that underpin the tunnel's safety requirements reflect the difficulties of getting firefighters in and other people out of a 54-kilometre undersea tunnel in the event of a fire. My noble friend Lady O'Cathain asked when the work on the TSIs will be completed and whether the TSI requirements will be rescinded. The Safety in Railway Tunnels TSI is expected to be revised in mid-2013. Some specific requirements in the Channel Tunnel rules have been removed-for example, the 30-minute running time for freight locomotives. Other remaining tunnel rules are expected to finish in September 2012.
	I turn to economic regulation of the Channel Tunnel. The UK considers that the Channel Tunnel's regulator's independence from any railway undertaking is properly preserved as regards the UK. No one in the UK IGC delegation or working at the Office of Rail Regulation in support of the IGC has any responsibility for Eurostar. Within the Department for Transport, policy responsibility for Eurostar is vested in a separate command that has no locus in or responsibility for the IGC.
	My noble friend Lady O'Cathain, the noble Lord, Lord Davies, and many other noble Lords talked about border and immigration controls. Rail liberalisation presents a number of border control challenges which the Home Office and the border force are seeking to resolve with colleagues from across government, the police, rail operators and the Governments of other European countries. It is occurring against a background of rapid changes in border control technology, which will help to meet some of those challenges. But these challenges will only become more significant with the increase in international services. That is recognised in respect of HS2.

Lord Berkeley: Will the noble Lord explain what border controls are planned for HS2? That seems a bit odd as I thought it was within the UK.

Earl Attlee: My Lords, I think the hope is that passengers will get on HS2 on an international journey further up the country, maybe from Birmingham.
	The noble Lord, Lord Faulkner, asked about Schengen. The position of the UK outside Schengen means that exit checks also need to be completed for all passengers leaving the zone prior to immigration arrival controls in the UK. The noble Lord, Lord Berkeley, raised the UK's possible infraction for non-compliance with the first railway package in respect of the Channel Tunnel. I am unable to discuss the infraction procedures with respect to the first railway package and the Channel Tunnel but we consider that the railway usage contract does not breach the requirements of directive 2001/14-the first railway package-for the duration of a framework contract, and complies with Articles 17.5 and 17.5a in that it relates to a uniquely large-scale and long-term investment which is covered by contractual commitments. The noble Lord, Lord Haskel, also asked about the Commission taking further action against member states for non-compliance of the first railway package. The European Commission is currently taking infraction action against those member states that have not correctly implemented the first railway package.
	I am grateful for your Lordships' comments and, where appropriate, I will certainly draw them to the attention of my right honourable friend the Rail Minister, Theresa Villiers.

Baroness O'Cathain: First, I thank everyone who took part in this debate. It has been a fantastic debate and the enthusiasm of every single Member, whether or not they are members of Sub-Committee B was palpable. I think that we achieved a lot in bringing the report to this state. However, as I said in my introductory remarks, we as a committee could never have done it without the help of the clerks and policy analysts. My noble friend Lord Freeman also paid tribute to their work. It was a great joy to have the noble Lord taking part in this debate because he was the previous chairman of Sub-Committee B and gently reminded the whole House of the debt we owe to the noble Lord, Lord Roper, for the gentle but firm way in which he guided us through paragraph after paragraph of all the reports that came before him. He is an amazingly hard worker and a very nice person to work with. I thank him.
	Noble Lords spoke today in so much detail that I know I will learn even more about the Channel Tunnel by reading Hansard. I was particularly thankful for the history lessons we were given. The one from the noble Lord, Lord Faulkner, was terrific. I was about to say that he was not in his place, but he is in a superior place-on the Woolsack. He took us back to 50 years ago and made me feel that perhaps there is nothing negative about being a techie. We also had a history lesson from the noble Lord, Lord Walpole, and I doubt if anybody in the Chamber will now forget the date of his birthday. In various meetings of Sub-Committee B, the subject of Norwich and the trains of East Anglia came up, and he was absolutely right-it is a disgrace that we do not get on and use and improve the railway system.
	As the noble Lord, Lord Davies of Oldham, said, one has only to go across to Europe to see how trains can work. We in this country have the enthusiasm to try to get the Channel Tunnel to work properly. It is not doing so at the moment. That is not a destructive critical point; it is being absolutely constructive, and our report was written on that basis. I look forward very much to the redraft of the first railway package. Instead of talking about the fourth, let us get on with it.
	I also thank the noble Baroness, Lady Scott, who has only just joined our committee but who has taken on board the report that was written long before she joined. She will be a marvellous member, judging by her contribution today. I thank and welcome her.
	I referred to the noble Lord, Lord Berkeley, in my speech. The fact that he and the noble Lord, Lord Bradshaw, went across to Switzerland and did all that work was amazing. It was a clear example of how to motivate the experience and expertise of the House, and how noble Lords become enthused about something to the benefit of the country and of the Government. When they read the committee's report and the report of this debate in Hansard, they will realise that there is great support for what they are doing to try to get the railways to work properly so that we can go for growth while keeping the focus on the consumer.
	I know that the Minister will write to noble Lords, and probably I shall have to as well to ask for additional information on some points, because this has been a fascinating debate. I will mention also the noble Lord, Lord Brooke, who has a great ability to keep us on the rails and heading in the right direction. He does that at every meeting. I thank him for it and am so glad that he is still on the committee.
	The noble Lord, Lord Davies of Oldham, paid us a gracious compliment by referring to the telling contribution of the members of the committee, and to the significant points made by non-members. His one objection was to the title of the report. We debated that. Certain of us-I will not say who-thought "Light at the End of the Tunnel" would be better. Others said perhaps not. I am sure that the noble Lord, Lord Roper, would agree that there has been quite a lot of discussion about the titles of reports. Perhaps one does all the hard work and then comes to a point where one can introduce a bit of levity. However, I do not think that our title is too cheeky; I think that tunnel vision is something we have experienced and will have to address.
	I thank the noble Lord, Lord Haskel, for the depth of his knowledge. He is so precise, which was obvious today in his contribution.
	I am sure I have missed out someone; I have just been scribbling. No, I do not think I have.
	I thank the Minister, who had a very difficult job to do. He knows where we are coming from and we know where he is coming from and that he supports us. We have got to try to get matters moving. It would be in order to have further discussions about the treaty of Canterbury but, in the mean time, I thank all noble Lords.
	Motion agreed.

House adjourned at 6.55 pm.